TMI Tax Updates - e-Newsletter
September 17, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Restriction on migration of Cenvat Credit to GST - first stage dealer in excise Regime - Section 140(3)(iv) is unconstitutional, struck down

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News

1. Finance Commission to visit Maharashtra from 17th Sep, Intra state disparity and issues related to urbanisation to be focussed

2. INDIA’S FOREIGN TRADE: August 2018

Notifications

Customs

1. 47/2018 - dated 14-9-2018 - ADD

Seeks to rescind Notification No. 10/2017-Customs (ADD) dated 24th March, 2017

2. 61/2018 - dated 14-9-2018 - Cus

Seeks to further amend the Notification No. 73/2005 - Customs, dated the 22nd July, 2005 and Notification No. 10/2008- Customs, dated the 15th January, 2008 to bring about necessary changes as per the second protocol amending the India Singapore Comprehensive Economic Cooperation Agreement

3. 78/2018 - dated 14-9-2018 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

Highlights / Catch Notes

GST

• Cenvat Credit Migration Restriction for First-Stage Dealers Deemed Unconstitutional; Section 140(3)(iv) Struck Down.

  Case-Laws - HC : Constitutional validity of restriction on migration of Cenvat Credit to GST - Transitional Credit - first stage dealers in excise Regime - prescribed documents (Invoices) older than twelve months - clause (iv) of subsection (3) of section 140 is unconstitutional, and the same is struck down.
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• Sub-Contractor for Railway Works Eligible for 12% GST Concessional Rate on Composite Supply Services.

  Case-Laws - AAR : Rate of tax - sub-contractor - even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12%
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Income Tax

• Assessment Reopening Justified for Nonreported Royalty Income; Tax Deduction at Source Does Not Prevent Escapement.

  Case-Laws - HC : Reopening of assessment - nonreporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income
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• No Penalty u/s 271(1)(c) as Gross Profit Addition Was Estimation, Not Due to False Records or Transactions.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Though the addition is confirmed by the CIT(A), but does not show that the assessee has not recorded any transaction in his books of account or any transaction recorded by him is false - Addition on account of gross profit was purely on estimation basis - No penalty
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• Internet and leased line charges not considered asset use u/s 194I; no TDS liability applicable.

  Case-Laws - AT : TDS u/s 194I - internet connectivity charges and specialized line rental - lease line charges - it is not for use of any asset involved in provision of such facility / service covered in section 194I - NO TDS liability.
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• Employees Can Claim Both Interest Deduction on Housing Loans and House Rent Allowance Exemption: Clarification on TDS Rules.

  Case-Laws - AT : TDS from salary payment to employees - considering the house property loss resulting from the deduction on account of interest on housing loan while making deduction of tax at source from the payment of salary to some employees who had also claimed exemption on account of house rent allowance u/s 10 - There is no fault in allowing two benefits under two independent provisions.
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• Previous Assessment Orders Valid for Current Year Income Calculation, Including Best Judgment Assessments.

  Case-Laws - AT : Whether previous orders of assessment, although they may even be best judgment assessments, would form good material or good evidence for purpose of computing income of assessment year in question - Held, yes
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• Notice Issued u/s 148 for Reassessment Due to Invalid Tax Return and Unexplained Credit Card Expenses.

  Case-Laws - AT : Reopening of assessment - unexplained source of credit card expenditure - return filing under wrong PAN - AO had only remedy under the provisions of the Act to issue notice under section 148 to assess the income of the assessee as there was no valid return and the return filed under wrong PAN was a non est return.
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• TDS u/s 192: Salary Reimbursements to Joint Venture Member Not Considered Share Income per Section 40(ba) & 67A.

  Case-Laws - AT : TDS u/s 192 - reimbursement of salary to the Member of Joint Venture (AOP) - the provisions of sec. 40(ba) shall not apply to the payment given to M/s ITDCL, since the said payments have not been received by it on its own account contemplated in sec. 67A r.w.s. 40(ba) of the Act and hence the same shall not acquire the character of “share income from AOP” in its hands.
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• Capital Gains Case Remanded Due to AO's Failure to Consult District Valuation Officer on Sale Transaction Valuation Discrepancy.

  Case-Laws - AT : Capital gain computation - genuineness of sale transaction - actual amount received is a far less than the circle rates of the registration authority or that the value adopted or assessed by the stamp valuation authority - AO did not record any reasons as to why the matter need not or shall not be referred to the DVO - matter remanded back.
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• Payments to Laborers via Intermediaries Exempt from TDS u/s 194C; No Section 40(a)(ia) Additions Applied.

  Case-Laws - AT : TDS u/s 194C - addition u/s 40(a)(ia) - TDS on labour charges - payments made to the labour through maistries cannot be construed as a contract between the assessee and the maistries and does not attract the TDS under section 194C.
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• Clarification on Section 36(1)(va): Due Date for PF and ESIC Contributions Based on Salary Disbursement Month, Including Grace Periods.

  Case-Laws - AT : Deduction u/s 36(1)(va) - late payment of employees’ contribution to PF and ESIC - relevant due date in such a case is to be seen with reference to the month of the actual disbursement of wages/salaries. - grace period available under the respective Acts should be taken into account while computing the delay, if any.
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Indian Laws

• Foreign Awards Exempt from Stamp Duty in India Under Indian Stamp Act, 1899, Enhancing Enforceability.

  Case-Laws - SC : Enforceability of foreign award - award has not born stamp duty in India - the expression “award” has never included a foreign award from the very inception till date. Consequently, a foreign award not being includible in Schedule I of the Indian Stamp Act, 1899, is not liable for stamp duty.
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Service Tax

• Cargo Services Excluded from Clearing and Forwarding Agent Tax Classification; No Service Tax Applicable on Loading and Storage.

  Case-Laws - HC : Classification of service - service with reference to loading, unloading, transportation, storage of cargo - service tax not payable under Clearing and forwarding agent service.
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• Interest from Security Deposits Excluded in Rent Valuation for Service Tax Calculations; Only Agreed Rent Considered.

  Case-Laws - AT : Valuation - renting of immovable property service - interest accrued on security deposit cannot be added to the renting agreed upon between the parties for the purpose of levy of service tax under the category of renting of immovable property.
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Central Excise

• Smyle Thanda Tel Classified as Ayurvedic Medicine Under Case Laws and Central Excise Regulations.

  Case-Laws - AT : Classification of goods - Smyle Thanda Tel - The product in question is rightly classifiable as ayurvedic medicine
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VAT

• VAT Not Applicable on Medicines for Indoor Patients as Part of Composite Medical Services.

  Case-Laws - HC : Levy of VAT - the medicines in the health care services provided to the indoor patients is not taxable as the amount charged cannot be bifurcated to cull out amount of sale of medicines, even if the amount is separately charged for pharmacy, laboratory services, implants services provided by the doctors as it is a composite medical service provided.
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• Tribunal Annulls Late Tax Order on Sugarcane; Issued Beyond 5-Year Limit in Violation of Assessment Rules.

  Case-Laws - HC : Time limit for passing Order of Assessment - Order of Assessment was set aside as the same had been passed more than 5 years after the close of the assessment year - levy of purchase tax on Sugarcane - Tribunal has rightly set aside the order.
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Case Laws:

• GST

• 2018 (9) TMI 885
  Constitutional validity - Transitional Credit - Restriction on migration of Cenvat Credit to GST - Vires of clause(iv) of subsection (3) of section 140 of the CGST Act - CENVAT Credit - purchases made by the First Stage Dealer - As per law existing prior to introduction of GST, the first stage dealers like the petitioners are not burdened with the excise duty component, and no time restrictions existed - petitioner is aggrieved by the provisions contained in Clause(iv) of sub-section(3) of section 140 of the CGST Act which provides that such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. This condition would limit the eligibility of a first stage dealer to claim credit of the eligible duties in respect of goods which were purchased from the manufacturers prior to twelve months of the appointed day. Whether the impugned provision makes an impermissible distinction between similarly situated persons forming a homogenus class? Whether the provision in question without proper justification takes away the vested right of the petitioners and thus acts with retrospective effect? Whether clause(iv) of subsection (3) of section 140 of the CGST Act is required to be declared unconstitutional? Held that:- It is well settled that as long as the legislation has necessary competence to frame a law and the law so framed is not violative of the fundamental rights enshrined in the constitution or any of the constitutional provision, the Court would not strike down the statute merely on the perception that the same is harsh or unjust. Particularly, in taxing statutes the Courts have recognized much greater latitude in the legislation in framing suitable laws. It is equally well settled that wherever the parliament has the power to frame a statute it also includes the power to make the law retrospective. In other words, the parliament also has wide powers to frame the laws including taxing statutes with retrospective effect. However, the Courts have recognized certain inherent limitations in framing retrospective tax legislations. The legislature (after transition to GST Regime) recognized the existing rights and largely protected the same by allowing migration thereof in the new regime. In the process, however, a condition was imposed to enable the assessees in the nature of first stage dealer such as the present petitioner-company viz. that the invoices or other prescribed documents on the basis of which credit was claimed were issued not earlier than twelve months immediately preceding the appointed day. In effective terms, this condition restricted the enjoyment of existing credit in respect of goods purchased not prior to one year of the appointed day. In relation to all goods purchased prior to such day, no credit would be available under the credit ledger to be maintained under the CGST Act. Such credit would be lost. Undoubtedly, therefore, this condition has retrospective operation and takes away an existing right. This by itself may not be sufficient to hold the provision as ultra vires or unconstitutional - no just reasonable or plausible reason is shown for making such retrospective provision taking away the vested rights. Had the statutory provision given a time limit from the appointed day for utilization of such credit, the issue would stand on an entirely different footing. Such a provision could be seen as a sunset clause permitting the dealers to manage their affairs for which reasonable time frame is provided. The present condition however without any basis limits the scope of a dealer to enjoy existing tax credits in relation to purchases made prior to one year from the appointed day. No such restriction existed in the prior regime. The present condition however without any basis limits the scope of a dealer to enjoy existing tax credits in relation to purchases made prior to one year from the appointed day. No such restriction existed in the prior regime. Merely the stated grounds in the affidavit in reply that the provision is introduced since physical identification of goods is necessary so as to ensure that the first stage dealers do not take any undue advantage of such benefit and also to accommodate the administrative convenience would not be sufficient. The benefit of credit of eligible duties on the purchases made by the first stage dealer as per the then existing CENVAT credit rules was a vested right. By virtue of clause (iv) of sub-section (3) of section 140A such right has been taken away with retrospective effect in relation to goods which were purchased prior to one year from the appointed day. This retrospectivity given to the provision has no rational or reasonable basis for imposition of the condition. The reasons cited in limiting the exercise of rights have no co-relation with the advent of GST regime. Same factors, parameters and considerations of in order to co-relate the goods or administrative convenience prevailed even under the Central Excise Act and the CENVAT Credit Rules when no such restriction was imposed on enjoyment of CENVAT credit in relation to goods purchased prior to one year. Though the impugned provision does not make hostile discrimination between similarly situated persons, the same does impose a burden with retrospective effect without any justification - clause (iv) of subsection (3) of section 140 is unconstitutional, and the same is struck down. Petition allowed.

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• 2018 (9) TMI 855
  Request for withdrawal of Advance Ruling application - Levy of GST - electricity transmission or distribution utility - Whether providing and supplying of electricity as per terms of agreement and getting reimbursement of the amount from tenants would be liable to GST under CGST/SGST Act and whether benefit under Notification No. 12/2017 CGST (Rate) Sr No. 25 or 09/2017 IGST (Rate) Sr No. 26 would be allowed? - Held that:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed without going into the merits or detailed facts of this advance ruling application by this authority. The Application in GST ARA form No. 01 of M/s. Magarpatta Retail Private Limited, vide reference ARA No. 56 dated 19.07.2018 is disposed off as being withdrawn unconditionally.

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• 2018 (9) TMI 854
  Rate of tax - sub-contractor - Works Contract Services (WCS) pertaining to railways original works contract - What Tax rate to be charged by the sub-contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract? - Whether to charge tax rate of 12% GST or 18% GST? Held that:- The WCS provided by them is the same or a part of the main contract entered into between the main contractor and the Railways. It also appears that works contract service is civil works performed by the sub-contractor for the Railways and the property in goods (materials used in the supply of Works Contract Service) also gets transferred to the Railways directly - In such a case as per the abovementioned clause (v) of Notfn No. 20/ 2017-CentraI Tax (Rate) dated 22.10.2017, the works contract service provided by the sub-contractor to the main contractor would be supply of Works Contract pertaining to Railways and therefore chargeable to tax @ 12% (6% of CGST and SGST each). However, the benefit of 12% tax rate would be available to the applicant only if the Works Contract services provided by them are Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways. In respect of Sr. No. 3 of Notification No. 11/2017 dated 28.06.2017 as amended uptill today, even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12% as given under Sr. No. 3 of Notification No. 11/2017 as amended Ruling:- The tax rate to be charged by the sub-contractor to the main contractor would be @ 6% of CGST and SGST each, in the present case - The tax rate to be charged would be 12% in the present case.

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• 2018 (9) TMI 852
  Levy of IGST - determination of place of supply of receipt of services by suppliers at Paradip Port Trust - location of of supplier of services and place of supply of services - Section 12 of the Customs Act, 1962 - Held that:- Keeping in mind the petitioner s grievance that unless its concerns are properly dealt with or adjudicated, it is likely to lose substantial amounts on account of the impending finality with respect to the refund claimed (the last date mandated for the purpose is 30.09.2018), the Court is of the opinion that in case the petitioner urges these along with any other contention before the concerned GST Officer, he should while ruling upon them deal with all arguments and ensure that the assessments are complete before that date i.e. 30.09.2018 - petition disposed off.

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• Income Tax

• 2018 (9) TMI 884
  Reopening of assessment - reason to believe - sum received by the assessee company by way of remuneration as a partner of one Zydus Healthcare, Sikkim - assessee claimed that the said income was exempt in terms of section 28(v) - nature of income - Held that:- Finally four weeks' time is granted to the learned counsel for the petitioner to cure the defects, pointed out by the Registry, failing which the special leave petition shall stand dismissed without further reference to the Court.

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• 2018 (9) TMI 883
  Disallowance under Section 14A - calculation of disallowance figures - Tribunal did not accept the figure of disallowance worked out by the assessee - Held that:- In this Special Leave Petition, the tax effect is less than rupees one Crore and is covered by the Circular of CBDT. Accordingly, the Special Leave Petition is dismissed.

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• 2018 (9) TMI 882
  Addition u/s 68 - unexplained cash credit - assessment records that the “feeder accounts” were opened either in the name of the assessee’s employees or in the name of those who operated for consideration and operated at the instruction of Mr. Ashok Gupta, proprietor of the assessee and these individuals denied of having any knowledge of transactions in those bank accounts - Held that:- Having regard to Kale Khan [1963 (2) TMI 33 - SUPREME COURT] and D.K. Garg [2017 (8) TMI 450 - DELHI HIGH COURT] it is held that per se the ITAT could have not ruled out taxability under Section 68, given the unsatisfactory nature of the explanation provided by the assessee. This court notices, at the same time that inconsistent approaches were adopted by the lower revenue authorities for two years: for the first block period, ending with AY 2000-2001, the assessee was sought to be taxed for a total amount of Rs. 71,396,211/-; for the later block period the CIT taxed (out of the same amount) only the sum of Rs. 3,99,35,142/-. It appears that the assessee could satisfactorily explain the genuineness and other necessary ingredients needed under Section 68 with respect to the balance except inability to co-relate the cheque or instruments with the creditor concerned. Given that on these aspects, the findings were in favour of the assessee (which do not appear to have been interfered with), the revenue’s appeal can only succeed in part. It is held that the revenue’s appeal has to succeed in part; the amount of Rs. 3,99,35,142/- in the account of the assessee can be taxed under Section 68 of the Act. The appeal is allowed to this extent.

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• 2018 (9) TMI 881
  Penalty u/s. 271(1)(c) - additions in respect of incentives received by the assessee in the form of excise duty refunds and sales tax exemption benefits - CIT(A) deleted such addition holding that the same were capital receipts and not chargeable to tax - Held that:- While confirming the view of CIT(A) deleting such penalty, the Tribunal, in the impugned judgement, held and observed that the assessee had not concealed any particulars of his income. To the receipts in the form of sales tax and excise duty concessions, the assessee had followed his own interpretation believing that the receipts being capital in nature were not chargeable for computation of book profit under section 115JB. Tribunal was of the opinion that clearly two views were possible and the assessee had held the bonafide belief and acted on the same. In any case, there was no failure on part of the assessee to conceal any particulars of income. We are broadly in agreement with the view of the Tribunal. - Decided against revenue.

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• 2018 (9) TMI 880
  Addition of suppressed sale - additions of income made on the basis of SCN issued under the Central Excise - assessee contended that proceedings under central excise could not be finalized - Held that:- As decided in VRUNDAVAN CERAMICS PVT. LTD. [2018 (5) TMI 1274 - GUJARAT HIGH COURT] by merely producing the copies of the statements of the witnesses accompanying the show-cause notices, such statements and the veracity thereof does not get automatically established. AO merely cosmetically gave an opportunity to the assessee to meet with such allegations, virtually, shifting the burden of proving the evasion of duty that had taken place on the assessee. We have perused the entire order of assessment. There is no independent material brought on record by the Assessing Officer other than those which were already collected by the Excise department and which, as noted earlier, are yet to be verified. - decided against revenue

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• 2018 (9) TMI 879
  Mismatch in the accounts of the assessee concerning its interest income - Undisclosed interest income as per 26AS data which was not included in total interest offered by the assessee for taxation - Held that:- Commissioner of Income Tax (Appeals) however, noted that the assessee had offered larger interest income which would subsume the error component of interest income. The Tribunal confirmed this view. No question of law arises. Depreciation on asset on which the assessee had purchased out of exempted income u/s.35AC - Held that:- Logic adopted in case of Rajasthan and Gujarati Charitable Foundation (2017 (12) TMI 1067 - SUPREME COURT) would substantially apply. In terms of section 35AC of the Act, the assessee who incurs expenditure by way of payment directly on eligible project or a scheme, would enjoy exemption of such expenditure during the relevant year. This exemption however would not cast any shadow on the assessee claiming any depreciation under section 32 which is allowable in respect of any building, machinery, plant or furniture being tangible assets owned wholly or partly by the assessee and for the purpose of business or profession at the specified rates. The requirements thus, are of the assessee owning wholly or partly any building, machinery, plant or furniture being tangible assets and having used them for the purpose of business or profession. Indisputably, these conditions are satisfied in the present case.

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• 2018 (9) TMI 878
  Reopening of assessment - reasons to believe - Income earned by the appellant from the Indian subsidiary by way of fee for technical services and royalty was not disclosed and included in the returns - assessee submitted TDS deduction criteria met - Held that:- A perusal of the figures in the statement furnished in respect of the income as reported in the original return of income and the return furnished u/s 148 leaves no doubt that there is huge difference and in this context it cannot be said that the notice u/s 148 is not supported by any valid reason or reasons proposing to re-open the assessment for the assessment years between 2004-05 and 2009-10. It is only after re-opening the matter and verification of the re-conciliation of royalty and FTS income as declared in the return u/s 147 of the Act with the TDS details of SIEL, the AO recorded that the Royalty/FTS income as offered to tax in such returns was acceptable. It cannot be said that there is no escapement of income from computation in the original returns of income filed by the assessee for the Assessment Years 2004-05 to 2009-10. It is only because the SIEL affected TDS on such Royalty, FTS income, whose benefit was availed by the assessee in the revised returns that no further tax liability was incurred though income escaping assessment got taxed in fresh proceedings. Therefore, we find that this aspect of nonreporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income. - Decided against assessee.

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• 2018 (9) TMI 877
  Provision for warranty - whether a contingent liability or an allowable expense - Held that:- As stated by the AO in the assessment order, the table reveals that there was substantial increase and jump in sales year after year in the Assessment Years 2002-03, 2003-04, 2004-05 and 2005-06, from Rs. 58.97 crores to Rs. 830.51 crores to Rs. 2408.01 crores, and then to Rs. 4729.14 crores, respectively. The provision for warranty would accordingly increase in numerical terms. Pertinently, the percentage of closing provision of warranty with reference to quantum of sales had decreased and came down as is reflected in the figure in the column (h) of the table above. In the present case, we are only concerned with the Assessment Year 2003-04 in which the percentage of closing provision to sales was only 0.81%. Variation in figure would indicate that no thumb rule was applied. Moreover in case of doubt and debate, Income Tax Authorities should have asked for the basis and the formula/criteria applied by the respondent/assessee to compute provision for warranty. On the other hand without disputing the computation, disallowance was made by holding that actual expenditure on warranty claims and not provision for warranty was allowable as expenditure. This proposition is wrong and incorrect. Improvement in technology would not justify disallowance of claim/expenditure on account of provision for warranty, though in a given case on basis of data it could be relevant factor in making the calculations. Thus in view of the decision of the Supreme Court in Rotork Control India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT OF INDIA] no good ground or reason to accept the aforesaid contention of the Revenue. Capitalization of marketing expenses - Held that:- Finding regarding capitalization or business expenditure is a finding of fact. Obviously, assessee could not have claimed title and depreciation, once the mobile phones etc. had been given and ownership had been transferred to the employees, dealers, sales personnel and after-sales-service centres. In the absence of any material and evidence to show that the findings of fact are perverse, we do not see any reason to interfere with the impugned order on the said aspect. Addition on account of stocks damaged during transportation etc., which had not been included in the closing stock - AO held that value of the mobile phones damaged in transit should be included the closing stock affirmed by CIT-A - Held that:- Assessee, at this stage, states that this issue may be remanded to the Tribunal for fresh decision as the reasoning given by the Tribunal is not correct and not germane to the issue in question. He states that the question of law need not be framed. Recording the said concession, this issue with regard to the damaged handsets and their inclusion in the closing stock is remitted to the Tribunal for fresh decision. Disallowance of the claim on account of obsolescence - Held that:- In the present case, after noticing the factual matrix the Tribunal observed that the closing stock has to be valued on the basis of net realisable value. The said issue has been remanded to the Assessing Officer to determine and decide afresh the cost of obsolete items with reference to net realizable value. In view of the said direction for remand, we do not think that any substantial question of law arises for consideration. Recording the aforesaid including the concession made by the assessee on the issue of damaged stock, the present appeal is disposed of without any order

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• 2018 (9) TMI 876
  Penalty u/s 271(1)(c) - while computing deduction under Section 10B they had wrongly netted the interest earned on the income tax refund against the interest paid - Tribunal deleted the penalty - Held that:- There is no dispute or debate that the respondent-assessee had specifically declared and stated in the income tax return that they had netted the interest received on the income tax refund from the interest paid for the purpose of computing deduction under Section 10B of the Act. Material facts were clearly disclosed, and not concealed and withheld. Tribunal has referred to the decision of MAK Data Private Limited versus CIT, (2013 (11) TMI 14 - SUPREME COURT) and CIT versus Zoom Communication Private Limited, (2010 (5) TMI 34 - DELHI HIGH COURT), to accept that assessee had discharged the onus to establish its bona fide while making claim for deduction/exemption under Section 10B of the Act by netting of interest received from Income Tax Department, from interest paid to the bank to make payment of tax to the Income Tax Department. There was a connect and link between the interest paid to the bank, which was business expenditure, and interest received from the Income Tax Department. Referring to factual matrix, the Tribunal has accepted the reasoning and finding given by the Commissioner of Income Tax (Appeals) that the conduct of assessee in netting of income received from interest paid was bonafide. The said finding is a finding of fact and no substantial question of law arises. No penalty to be levied - Decided in favour of assessee

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• 2018 (9) TMI 875
  Penalty levied u/s 271AAA - assessee surrendered during the assessment proceedings - Held that:- It is pertinent to note that the Assessing Officer himself has recorded the statement of Shri Mohinder Kumar Gupta in the assessment order, wherein the Director of the Company has elaborated the transaction which was also confirmed by Mr. Kailash Chandra Agarwal. The assessee Company through its reply has also explained the manner in which the income was derived. Thus, the assessee in our opinion has explained substantially the income which was surrendered during the assessment proceedings. Therefore, Section 271AAA of the Income Tax Act will not be applicable in the present case. - Decided against revenue.

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• 2018 (9) TMI 874
  Penalty u/s 221(1) - default in payment of arrears of tax - Held that:- Penalty u/s 221(1) levied in respect of tax liabilities determined in orders U/s 201(1A) for the aforesaid year. As the aforesaid orders u/s 201 r.w.s. 201(1A) of IT Act for Financial Year 2007-08 (Assessment Year 2008-09) and Financial Year 2008-09 (Assessment Year 2009-10) have been set aside by Delhi Bench of ITAT and restored to the file of the AO, the penalty levied U/s 221(1) Employees provident Fund Organization Regional Office Delhi have no legs to stand at present. We set aside the aforesaid orders of the Ld. CIT(A) for A.Y. 2008-09 (F.Y. 2007-08) and restore the corresponding matter regarding penalty u/s 221(1) of the IT Act to the file of the Assessing Officer for fresh orders. The Assessing Officer shall pass fresh orders U/s 221(1) of I.T. Act after the consequential orders U/s 201 r.w.s. 201(1A) of I.T. Act pursuant to aforesaid order dtd. 03.08.2016 of ITAT are passed. The Assessing Officer will give reasonable opportunity to the assessee before passing fresh orders U/s 221(1) of IT Act - Appeals of the assessee are partly allowed for statistical purpose.

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• 2018 (9) TMI 873
  Exemption u/s 54 - LTCG - investment outside India - Profit on sale of property used for residence - capital gains arising from the sale of a residential house in India, and the same invested in another house property in Hong Kong - Held that:- The words ‘constructed a residential house’ has been substituted with the words ‘constructed, one residential house in India’ by Finance Act, 2014 w.e.f 01/04/2015. Upon careful analysis of the same, we find that the words in India has been brought to the statute w.e.f. 01/04/2015 only and prior to that there was no restriction as such with respect to the location of the property before the aforesaid deduction could be claimed by the assessee. The stated amendment, in our opinion, being substantive in nature, was only prospective in nature and was not applicable for the assessee at the relevant point of time, the AY being 2012-13. Prior to the aforesaid amendment, in our view, there was no bar for the taxpayer making investments outside India in residential house property to get the benefit of deduction u/s. 54 provided other conditions are fulfilled. As decided in Leena Jugalkishor Shah Vs. ACIT [2016 (12) TMI 351 - GUJARAT HIGH COURT] prior to the amendment the only stipulation was to invest in a new residential property and there was no scope for importing the requirement of making such investment in a residential property located in India. We find that the stipulations as to investment, in Section 54 & 54F are pari-materia the same. The revenue has not disputed that fact that the investment in Hong Kong has been made by the assessee in a residential property out of the impugned capital Gains. In view of the stated position, we are of the considered opinion that the assessee was entitled for the deduction u/s 54 on account of aforesaid investments. We direct Ld. AO to allow the aforesaid deduction u/s 54 to the assessee to the extent of investment made. - Decided in favour of assessee

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• 2018 (9) TMI 872
  Penalty u/s 271(1)(c) - assessee disclosed incorrect profit - incorrect GP estimation - Held that:- no satisfaction recorded by the ld AO in assessment order that whether the assessee has concealed income or furnished inaccurate particulars of income. Even in the penalty order dated 10.05.2013, the ld AO has held that the assessee is liable for penalty u/s 271(1)(c) of the Act as assessee has furnished inaccurate particulars of his income and concealed particulars of his income. Therefore, the ld AO is not certain about the exact charge on the assessee. Addition on account of gross profit was purely on estimation basis. In view of this it cannot be said that the assessee has furnished any inaccurate particulars of his income or concealed income on this issue. With respect to the addition of the sundry creditors, assessee has explained full details about difference between balance as per the books of assessee as well as the information obtained by the AO and reconciled. The assessee has shown that in some of the cases the customer has been billed certain goods which was not accepted by the assessee. In one of the case, the payment made by the assessee was also not recorded. Out of the total four creditors the addition was upheld only with respect to Rs. 177958/-. Though the addition is confirmed by the first appellate authority, but does not show that the assessee has not recorded any transaction in his books of account or any transaction recorded by him is false. Further the ld CIT(A) has also confirmed the penalty without verifying that whether the assessee is guilty of furnishing inaccurate particulars of income or concealment of income - decided in favour of assessee

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• 2018 (9) TMI 871
  Rejection of books of accounts - G.P. estimation - onus as casted on the assessee to substantiate the claim - Held that:- GP estimation of 15% as made by Ld. AO was slightly on the higher side and therefore we propose a net addition of 0.5% on sales turnover of Rs. 46.29 crores to take care of stock discrepancies, stock-loss and high labor charges. At the same time, the disallowance of commission expenses of Rs. 14.76 Lacs as estimated by Ld. AO, in our opinion, was fair in the circumstances and therefore, the stand of Ld. CIT(A), in this regard, stand reversed. Lastly, the stand of Ld. CIT(A) in estimating the disallowance of 25% against foreign travelling expenses was just and fair under the circumstances and therefore, the same do not require any interference on our part.

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• 2018 (9) TMI 870
  Disallowance u/s 14A - Held that:- Tribunal has recorded a finding that own funds in the shape of Share Capital & Reserves of Rs. 10004.10 Lacs were much more than investment of Rs. 8094.70 Lacs and therefore, interest disallowance was not justified in terms of various judicial pronouncements. Upon perusal of financial statements of impugned AY, as placed on record, we find that there is no change in the figures of investment and the same remain static at Rs. 8094.75 Lacs. This being the position, interest disallowance as made by Ld. AO stand deleted and the grounds raised, in this regard stand allowed. So far as the expense disallowance - submission of the assessee is that only income yielding investments are to be considered to arrive at disallowance - We direct Ld.AO to recompute expense disallowance u/r 8D(2)(iii) by considering only those investments which have yielded exempt income during the impugned AY. The assessee is directed to provide requisite computations, in this regard. The ground stand partly allowed.

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• 2018 (9) TMI 869
  Assessment u/s 153A - Held that:- It is undisputed fact that the assessment for impugned AY was non-abated assessment since no proceedings were pending for the same on the date of search i.e. 30/03/2012. The original return of income was filed by the assessee on 07/05/2010 and the time limit for issuance of scrutiny assessment notice u/s 143(2) had already expired which was a statutory requirement to scrutinize the return of income of the assessee. The impugned additions are not based on any incriminating material found during the search operations since the expenditure as claimed by the assessee has been disallowed by placing reliance on Section-3 since AO opined that the business was not set-up by the assessee during impugned AY. However, it is noteworthy that the genuineness of the expenditure is also not in question since Ld. AO himself has treated the same as capital expenditure. Another point to be noted is that impugned order record a finding that majority of these expenditure have already been disallowed by the assessee while filing the original return of income which could not be controverted by the revenue - no addition can be made in respect of assessments which have become final if no incriminating material is found during search or during 153A proceedings - See CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. - Decided in favour of assessee

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• 2018 (9) TMI 868
  Revision u/s 263 - issue of non-deduction of TDS on certain payments as reported in column No. 34(a) of Tax Audit Report remained to be examined by AO to consider disallowance u/s 40(a)(ia) - Held that:- The perusal of chronology of events makes it crystal clear that AO, during assessment proceedings, was clinched with the issue of TDS compliance on expenditure claimed by the assessee and had raised specific queries in this regard. The requite details / response / reply to the same was duly furnished by the assessee from time to time, apparently, to the satisfaction of Ld. AO since no disallowance u/s 40(a)(ia) has been made in the quantum assessment order. We find that it is not a case of lack of inquiry or inadequate inquiry which warrants exercise of revisional jurisdiction u/s 263 by higher authorities. AO, with due application of mind, examined the claim of the assessee in this regard and took a conscious decision not to make any disallowance u/s 40(a)(ia). Nothing on record suggest that the view of the Ld. AO was erroneous, in any manner. This being the case, the order of Pr.CIT, in invoking jurisdiction u/s 263 could not be sustained and the same, in our opinion, was bereft of any merits. Therefore, we quash the same and restore the quantum assessment order of Ld. AO. - Decided in favour of assessee.

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• 2018 (9) TMI 867
  Penalty u/s 271C - assessee company had not complied with the TDS provisions properly - assessee company was held to be liable to deduct TDS from the payment of internet connectivity charges and specialised line rental u/s 194J being in the nature of royalty by relying on Explanations 4, 5 and 6 to section 9(1)(vi) inserted by the Finance Act, 2012 with retrospective effect - CIT(A) did not approve this view of AO by holding that the liability to deduct tax at source was governed by section 9(1)(vi) as it existed before the Finance Act, 2012 - Held that:- As rightly pointed out by assessee this view taken by the CIT(A) is supported by various judicial pronouncements including the decision of Mumbai Bench of this Tribunal in the case of Channel Guide India Ltd. vs ACIT [2012 (9) TMI 95 - ITAT MUMBAI] wherein it was held that the assessee cannot be held to be liable to deduct tax at source by relying on the subsequent amendments made in the relevant provision with retrospective effect - it was impossible for the assessee to deduct tax in the F.Y. 2003-04 when as per the legal position prevalent in the said F.Y., the obligation to deduct tax was not on the assessee -we uphold the impugned order of the Ld. CIT(A) holding that the assessee was not liable to deduct tax at source from the amount in question paid towards internet connectivity charges and specialised line rental u/s 194J and dismiss Ground No. 1 of the Revenue’s appeal. TDS u/s 194I - liability to deduct tax at source from the amount paid towards internet connectivity charges and specialized line rental - Held that:- In the case of Destimoney Securities Pvt. Ltd. vs ITO [2017 (8) TMI 714 - ITAT MUMBAI] at similar situation held that the lease line charges were paid by the assessee to the internet service provider for faster internet access on dedicated lease line and as such the said payment had been made for use of telecommunication services / connectivity for transmission of voice / data facility provided by the vendors and not for use of any asset involved in provision of such facility / service covered in section 194I of the Act - the assessee, therefore was not liable to deduct tax at source u/s 194I of the Act and he could not be treated as the assessee in default u/s 201(1)/201(1)A of the Act in respect of failure to deduct tax at source from the payment made towards lease line charges. - decided in favour of assessee TDS from salary payment to employees - considering the house property loss resulting from the deduction on account of interest on housing loan while making deduction of tax at source from the payment of salary to some employees who had also claimed exemption on account of house rent allowance u/s 10 - Held that:- CIT(A) however found that these two benefits were governed by two independent provisions and since the concerned employees had satisfied the conditions for claiming the benefits under these two independent provisions, there was no violation on the part of the assessee of the Income Tax Act. At the time of hearing before us, the learned DR has not able to raise any material contentions to reduce or controvert the decisionrendered by the Ld. CIT(A) on this issue or the reasons given while arriving at the same. - Decided against revenue Penalty u/s 271C - treating the assessee company as the assessee in default for the alleged non-deduction or short deduction of tax at source from the concerned payments - Held that:- Since the said issue has already been decided by us in the foregoing portion of this order while disposing of the respective appeals of the assessee and revenue holding that the assessee company could not be treated as the assessee in default u/s 201(1)/201(1A) of the Act, the consequential penalty imposed by the A.O. u/s 271C of the Act for the alleged default of the assessee for compliance with the relevant TDS provision is liable to be cancelled. - Decided in favour of assessee

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• 2018 (9) TMI 866
  Exemption u/s 11/12 denied - General Principles concerning retrospectivity - amendment to proviso in Sec.12A - scope of amendment - Held that:- As amendment made by Finance Act, 2014 by inserting a proviso in Sec.12A of the Act shall be construed retrospectively in operation because the legislator in its wisdom has brought this proviso to prevent genuine hardship which could be caused on the assessee due to non-registration u/s 12A of the Act. Even otherwise the Apex Court in the case of ‘CIT vs. Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT] clearly held “if a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislator’s, object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect”. Thus we do not have any hesitation to hold that proviso to Sec.12A(2) which was added by Finance Act, 2014 shall be retrospective in operation. Hence, the assessee shall be entitled to get the benefit of registration, therefore, we are inclined to set aside the impugned order passed by the ld. CIT(A) as well as assessment order and remand the case to the file of the Assessing Officer to decide afresh. - Appeal by the assessee is allowed for statistical purposes.

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• 2018 (9) TMI 865
  Addition made u/s. 40A(3) - Payment in cash against purchase of liquor by the partner on behalf of the Firm - Held that:- On perusal of order in Ramnagar Pachwai & C.S [2016 (11) TMI 1034 - ITAT KOLKATA] we find that this Tribunal discussed the issue in detail analyzing with various case laws available in the said order and held that cash payments made by the assessee, who is retail vendor to the Principal, Govt. of West Bengal through its wholesale agent. The assessee i.e retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the IT Rules. The assessee’s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. No hesitation in deleting the disallowance made u/s 40A(3) of the Act in all the years under appeal. Accordingly, the grounds raised by the assessee for all the years under appeal are allowed. Addition on account of alleged purchase out of books of assessee - Held that:- All payments made on behalf of assesse by cheques and TCS amount deducted thereon. It is also observed which is the details of payment made by assesse to said M/s. Bhattacharya Bottling plant Pvt. Ltd. It clearly shows that all the payments were made by cheque from the account of one partner, Shri Sudip Kr. Chatterjee. An amount of Rs. 2,09,070/- was transferred to M/s. Bhattacharya Bottling Plant Pvt. Ltd vide cheque no. 927174. Likewise vide cheque nos. 927175, 927176 & 927177, which are matching with cheque nos. as discussed above in respect of page-32 of the paper book. Therefore, we find force in the submissions of the ld. AR that one of his partner, Shri Sudip Kr. Chatterjee made the payments through his individual account. In our opinion, it cannot be doubted as out of books as viewed by the AO, which confirmed by the CIT-A. Thus, the CIT-A was not justified in confirming the addition made by the AO on this issue. The order of CIT-A is set aside and deleted the addition made by AO. Ground no. 5 raised by the assessee is allowed. Addition on account of undisclosed purchase - Held that:- As contended that Sh. Sudip kr. Chatterjee is an authorized licencee to purchase liquor from IFB Agro Industries, which was not disputed by the AO. In view of above discussion, taking into consideration the submissions of assessee along with documentary evidences placed before us in the paper book from pages 19-27 relating to this issue the addition made by the AO in the hands of assessee does not stand and it is liable to be deleted. Therefore, the order of the CIT-A on this issue in confirming the same is not justified. Thus, the order of CIT-A on this issue is set aside by deleting the said addition made by the AO Disallowance of expenses @ 20% of expenditure - According to AO assessee could not produce any supporting evidence and as such disallowed the same at 20% and added the same to the total income of assessee - Held that:- Before the CIT-A also no substantial evidence was filed by assessee and as such he confirmed the same as disallowed by the AO. Before us also except making submission that bills and vouchers were destroyed during the agitation of local females and as such no evidence or whatsoever proving the same filed before us. The reasons as stated by assessee before us for non submission of any substantial evidence in support of claim of expenditure is not acceptable, as we noted that no books of account were even produced before the AO. In such circumstances, we find no infirmity in confirming the order of AO. Ground of assessee’s appeal is dismissed.

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• 2018 (9) TMI 864
  Estimation of income of the assessee by applying a fair and reasonable net profit rate - Estimation of income by applying net profit rate of 8% - Held that:- Estimation of profit is purely a question of fact meaning thereby that no particular rate of profit has universal application and depending upon the facts and circumstances of each case the rate of profit varies. It therefore implies past history of the assessee’s own case is the most relevant guide for estimation of profit. CIT(A) has also ignored the provisions of Sec. 145(3)/144 by not appreciating the trading results declared by the assessee in the earlier years and has confirmed the very high and unreasonable net profit rate of 8% on the gross total receipts which is without any basis by taking support of the provisions of sections 44AD which are not applicable in the present case because the turnover of the assessee is in several crores. Past history is the best guide to estimate profit where book profit is unbelievable, we derive authority from the Hon’ble Jurisdictional M.P High Court Judgement in the case of ‘VrajlalManilal & Co. Vs CIT’ [1972 (11) TMI 9 - MADHYA PRADESH HIGH COURT] “Section 145 of the Income-tax Act, 1961 Method of accounting - Estimation of profit - Assessment year 1957-58 - Whether previous orders of assessment, although they may even be best judgment assessments, would form good material or good evidence for purpose of computing income of assessment year in question - Held, yes.” The grievance of the assessee is accepted as justified. It is just fair and reasonable to estimate income of the assessee at the Net Profit rate of 5.0% as against 8% estimated by the authorities below. Accordingly, the ground is partly allowed.

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• 2018 (9) TMI 863
  Disallowance of HRA exemption claimed u/s 10(13A) - notice u/s 142(1) with queries the assessee was asked to justify the claim of deduction/exemption - Held that:- We find that neither before the authorities below nor before us the assessee has produced any evidence to show the actual payment of rent. Even if the amount of Rs. 1,07,084 is considered as actual payment of rent by the assessee, the allowable deduction computed by the AO as per the provisions of Rule 2A of the IT Rules comes to Rs. 16,250/- being the excess of 10% of the salary or the actual rent paid whichever is less. Thus the salary of the assessee is undisputedly Rs. 9,08,341/- and 10% of the same comes to Rs. 90,834/-. Thus the excess of Rs. 90,834/- of actual rent paid is an allowable deduction and hence the difference between actual rent paid of Rs. 1,07,084/- and Rs. 90,834/- is Rs. 16,250/-. No error or illegality in the order of the AO restricting the claim of exemption of HRA to Rs. 16,250/-. - Decided against assessee Reopening of assessment - unexplained source of credit card expenditure - return filing under wrong PAN - Held that:- In the case in hand, the income as considered escaped assessment in the reasons recorded by the AO was very much part of the salary income which was finally assessed by the AO. As regards the return of income filed by the assessee on 28th July, 2008, admittedly the assessee has filed the said return of income under PAN : AJFPG 6152 K whereas the correct PAN of the assessee is AEXPG 3058 D. The assessee had admitted that the return was filed under wrong PAN. AO has recorded in the reasons that as per the record the assessee did not file any return of income, therefore, the non availability of the return of income in the system and with the AO at the time when the AO proposed to initiate the proceedings under section 147/148 of the Act is not in dispute, though in the enquiry conducted by the AO prior to the issue of notice under section 148 the assessee pointed out that he had filed a return of income on 28th July, 2008 but under wrong PAN. We find that the said response of the assessee of filing return of income under wrong PAN will not change the situation and remedy for processing the return of income as by that point of time in the month of March, 2015 all the time limitation of processing the return of income originally filed under wrong PAN were expired. Therefore, the AO had only remedy under the provisions of the Act to issue notice under section 148 to assess the income of the assessee as there was no valid return and the return filed under wrong PAN was a non est return.- Decided against assessee.

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• 2018 (9) TMI 862
  Deduction u/s 80P(2)(a)(i) in respect of interest income received by the assessee on investments made with Sub-Treasuries, Banks etc. - whether interest income received by the assessee on investments with sub-treasuries and banks was liable to be assessed under the head “income from other sources” or “income from business”? - Held that:- In the instant case the assessee had made investments with sub-treasuries and banks in the course of its business of banking / providing credit facilities to its members. Therefore, it was entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act in respect of interest income that was received on such investments. See THE VAVVERU CO-OPERATIVE RURAL BANK LTD. VERSUS THE CHIEF COMMISSIONER OF INCOME TAX, VIJAYAWADA [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee.

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• 2018 (9) TMI 861
  Reopening of assessment - Held that:- Hon’ble Supreme Court in the case Foramer France [2003 (1) TMI 101 - SUPREME COURT] has taken the view that the first proviso to section 147 of the Act lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevant assessment year. Once the exception carved out by proviso to s. 147 comes into play, the case would fall outside the ambit of s. 147 of the Act. As per proviso to s. 147 no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. We have gone through the reasons recorded for issuance of notice under section 148 of the Act as reproduced above and noted that on both the issues i.e. Prior Period Adjustments of brokerage refund as well as interest paid to Global Trust Bank and Madhavpura Mercantile Co-op Bank, the complete details were filed before the AO during the course of original assessment proceedings in response to the queries raised by the AO. Admittedly, the assessment was completed under section 143(3) of the Act and reopening by issuing notice under section 148 of the Act is beyond four years - decided in favour of assessee

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• 2018 (9) TMI 860
  TDS u/s 192 - reimbursement of salary to the Member of Joint Venture (AOP) - expenses from non-deduction of tax at source under section 40(ba) - Held that:- The payments contemplated in sec. 40(ba) should constitute “Share income from AOP” in the hands of the recipient member. In the instant case, the payments made by the assessee to M/s ITDCL do not constitute “Share income” in the hands of M/s ITDCL, but it merely offsets the expenditure incurred by it, i.e., the money has been received by M/s ITDCL towards reimbursement of expenses incurred by it on its employees on behalf of the assessee. As the bench specifically asked A.R as to whether M/s ITDCL has duly deducted tax at source from the salary payments made by it to its employees, who were deputed to the assessee. As A.R submitted that M/s ITDCL has duly deducted tax at source from the salary payments made to its employees and further the assessee has also clarified this aspect to the tax authorities. Thus we are of the view that the provisions of sec. 40(ba) shall not apply to the payment given to M/s ITDCL, since the said payments have not been received by it on its own account contemplated in sec. 67A r.w.s. 40(ba) of the Act and hence the same shall not acquire the character of “share income from AOP” in its hands. Accordingly we set aside the order passed by Ld CIT(A) on this issue. - Decided in favour of assessee

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• 2018 (9) TMI 859
  Capital gain computation - genuineness of sale transaction - Not referring the matter under 50C (2) to the DVO for re-determination of the fair market value - whether the sale consideration and consequently the capital gain on sale of its land purportedly to assess Smart Estates Private Limited was correctly disclosed by the assessee? - Held that:- It is an admitted fact that all the details relating to measures Smart Estates or M/s Aeren R Enterprises Private Limited including the pan card No are available before the Ld. AO. Record does not reveal that at any point of time the Ld. AO had issued any notice to M/s Aeren R Enterprises Private Limited, though the fact of M/s Smart Estates merging with M/s Aeren R Enterprises Private Limited was intimated to him. We find any amount of strength in the argument of the Council that the income has to be assessed in the hands of a proper person who has enjoyed the actual income in law and if M/s Aeren R Enterprises failed to disclose the income of SEPL in the returns of income for the assessment year 2012-13, Ld. AO should have realized that the escapement of income is in the hands of M/s Aeren R Enterprises but not the assessee, and in all fairness the Ld. AO should have taken steps under section 147/148 of the Act against M/s Aeren R Enterprises. We are at a loss to understand as to how the assessee could be made responsible for the escapement of income in the hands of M/s Aeren Enterprises and to make the assessee answerable for the same. We understand that the things would have been different should M/s Smart Estates or for that matter M/s Aeren R Enterprises denied the execution or existence of the agreements of sale or M/s Smart Estate’s receiving the amount. nothing prevented the Ld. AO from making further enquiry by calling for the post merger financials of M/s Aeren R Enterprises or to consider the possibility of taking appropriate steps against M/s Aeren R Enterprises. The process adopted by the Ld. AO in this fact-finding exercise is not satisfactory. AO proposing to increase the value as per section 50C of the Act for the purpose of computation of capital gains, the assessee disputed the same by saying that is not at all correct and highly unjustified to increase the sale consideration to the value as per section 50C for the purpose of computation of capital gain. The Ld. AO did not record any reasons as to why the matter need not or shall not be referred to the DVO. When it is pleaded that the actual amount received is a far less than the circle rates of the registration authority or that the value adopted or assessed by the stamp valuation authority under subsection (1) thereof exceeds the fair market value of the property as on the date of transfer, the Ld. AO does not seem to have taken cognizance of the same to refer the matter to the DVO for the determination of the actual value under subsection 2 of section 50C of the Act. Authorities below have not examined the issue from a proper perspective and in the manner in which the facts deserve to be investigated, to ensure that the assessment is made as accurately as possible consistent with the statutory provisions. Thus a fit case to set aside the impugned order and to remand the matter to the file of the Learned assessing officer to decide the matter afresh in the light of our observations - Appeal of the assessee is allowed for statistical purposes.

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• 2018 (9) TMI 858
  TDS u/s 194C - assessee has not made the TDS on labour charges - addition u/s 40(a)(ia) - Held that:- There is no dispute with regard to the fact that the assessee has got the work done by the labourers under their supervision. The Department could not establish that there is express or implied contract between the assessee and maistries. Therefore, the facts of the assessees case are squarely covered by the decisions of this co-ordinate Bench in the case of R. Subbaraju [2010 (11) TMI 1076 - ITAT VISAKHAPATNAM] and best feeds [2016 (3) TMI 721 - ITAT VISAKHAPATNAM]. Thus we hold that the payments made to the labour through maistries cannot be construed as a contract between the assessee and the maistries and does not attract the TDS under section 194C of the Income- tax Act and consequently no disallowance is called for under section 40(a)(ia) of Income-tax Act. - Decided in favour of assessee

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• 2018 (9) TMI 857
  Denial of business deduction u/s 36(1)(va) - late payment of employees’ contribution to Provident Fund (PF) and Employees' State Insurance Corporation (ESIC)- Held that:- The assessee has tried to demonstrate that employees’ contribution to PF/ESIC has been made before the ‘due date’ as prescribed under the respective Act having regard to the month of disbursement of salary/wages and also the grace period available under the relevant Acts. It is thus broadly the case of the assessee that the relevant ‘due date’ for making payment of contribution has to be seen not with reference to the relevant months relatable to wages/salary but the month of its actual disbursement. Coupled with this, grace period available under the respective Act is also required to be taken into account. The co-ordinate bench of Tribunal in Kanoi Paper & Industries Ltd. vs. ACIT [2001 (5) TMI 139 - ITAT CALCUTTA-E] has observed that the relevant due date in such a case is to be seen with reference to the month of the actual disbursement of wages/salaries. We also are of the view that grace period available under the respective Acts should be taken into account while computing the delay, if any. We consider it expedient to restore the issue back to the file of the AO for factual verification and re-determination of the issue - Decided in favour of assessee for statistical purposes.

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• 2018 (9) TMI 856
  Deduction claimed u/s 80IB(10) disallowed - assessee has failed to fulfill conditions specified u/s 80IB(10) as the flat size of Tower T5 & T6 is more than 1500 sq.ft. and hence, the assessee is not eligible for deduction u/s 80IB(10) in respect of whole project - Held that:- The principle is now well settled with the decision in the case of CIT Vs Vandana Properties (2012 (4) TMI 54 - BOMBAY HIGH COURT), wherein clear that the assessee is eligible for proportionate deduction from eligible profit in a housing project in respect of flat which is having super built up area of less than 1500 sq.ft. CIT(A), after considering relevant facts has rightly directed the AO to allow proportionate deductions in respect of Tower T4 out of total deductions claimed by the assessee including Towers T5 & T6. In this view of the matter and consistent with the view taken by the co-ordinate bench in assessee’s own case in line with the decision of Hon’ble Bomby High Court in the case of CIT Vs Vandana Properties (supra), we are of the view that the assessee is eligible for proportionate deduction of eligible profit wherever the flat size is less than 1500 sq.ft. subject to fulfillment of other conditions specified in section 80IB(10). Deductibility of eligible profit from Tower T5 & T6 in the light of provisions of section 80IB(10) - Held that:- The deduction claimed u/s 80IB(10) needs to be examined in the light of said provisions to ascertain whether the assessee is eligible for deduction or not in the given facts and circumstances of the case. The issue of revenue neutrality in the light of book profit computed u/s 115JB does not in any way hamper the allowability of deduction claimed u/s 80IB(10) as the assessee could always claim tax credit on taxes paid on book profit in subsequent years. Therefore, we are of the view that the issue needs to be re-examined by the Ld.CIT(A) in the light of facts of assessee’s case and provisions of section 80IB(10) in respect of Tower T5 & T6. Hence, we set aside ground 4 raised by the revenue in their appeal and cross objection filed by the assessee to the file of the CIT(A) and direct him to decide the issue.

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• Customs

• 2018 (9) TMI 848
  Restoration of Appeal - Held that:- The application for restoration of appeal is devoid of merits as the Final Order dated 14.06.2017 passed by the Bench is on merits. The Bench has agreed with the detailed findings of the first appellate authority which has been upheld. Hence, the question of restoring the appeal does not arise. The application for restoration of appeal is dismissed. Rectification of Mistake - Held that:- The issue is regarding the contemporary value of indigenous identical goods as the appellant did not furnish actual freight, insurance, etc., despite undertaking to do so while finalising assessment under Section 18 of Customs Act, 1962. The Portion of the Order of the first appellate authority as reproduced in the Final Order of the Tribunal dated 14.06.2017 does indicate the same - there is no error apparent on the face of the records for correction on the merits of the case. Demand of Interest - Held that:- The impugned order that confirms the demand of the duty is upheld but the orders which confirm the interest on the appellant herein is unwarranted and not in accordance with the provisions of Section 18(3) of the Customs Act, 1962 and hence that portion of the impugned order is struck down - application for rectification of mistake is allowed to the extent that the impugned order which upholds the interest liability is set aside. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2018 (9) TMI 851
  Corporate Insolvency Resolution Process - Held that:- Application is complete as per the requirements of Section 7 (2) of the Code and other conditions prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the pro forma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete. The name of the IRP has been proposed and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional. As a sequel to the above discussion, this petition is admitted and Mr. Rohit Sehgal with the address AAA Insolvency Professionals LLP, E-10A, Kailash Colony, Greater Kailash-1, New Delhi-110048 and email-id [email protected] and having registration number IBBI/IPA-001/IP-P00528/2017-18/10953 is appointed as the Interim Resolution Professional.

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• 2018 (9) TMI 850
  Resolution plan eligibility - corporate insolvency process - meeting the requirement as per the provisions of the Code and Regulation 38(l)(a) of the CIRP Regulation - Held that:- Provision in the Resolution Plan can be provided for execution of the conveyance deed by the Corporate Debtor in the name of the Applicant upon fulfilling the final payment and that a deed of conveyance to be executed in the name of the Applicant by the RP and an affidavit to that effect has been filed by the RP. So also a revised plan has been filed by the RP on 2nd August, 2018 incorporating a clause in the Loan Profile for sale of the property to the applicant in CA with in 30 days of approval of the resolution plan. Making the said provision in the Resolution Plan would satisfy the requirement of the claimant. (i) The Resolution Plan of Mr. S. K. Mitra, which is approved by the CoC with 100% voting percentage, is hereby approved under provisions of Section 31(1) of the Insolvency and Bankruptcy Code, 2016, which will be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. (ii) The revival plan of the company in accordance with the approved Resolution Plan shall come into force with immediate effect. (iii) The moratorium order passed under Section 14 shall cease to have effect. (iv) The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. (v) Before parting with, it appears that I have to endorse my Appreciation to the work rendered by the Resolution Professional, Mr. Prabhjit Singh Soni for having a successful resolution process so as to find out a stakeholder having repute to take over the stressed assets of the corporate debtor/ Southern Cooling Towers Pvt. Ltd.

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• 2018 (9) TMI 849
  Corporate Insolvency Resolution Process - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation Act applicability - Held that:- As Appellant submitted that the claim related to the year 2010 and thereby it was barred by limitation, but such submission cannot be accepted in view of the decision of this Appellate Tribunal in “M/s. Speculum Plast Pvt. Ltd. V/s. PTC Techno Pvt. Ltd. Company Appeal (AT) (Insolvency) [2017 (12) TMI 454 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI]”, wherein this Appellate Tribunal held that the ‘Limitation Act’ will not be applicable to the proceeding under ‘I&B Code’. Then it is contended that the total records were not enclosed by the ‘Operational Creditor’ as is required under the law, but in absence of any specific pleading, such arguments cannot be accepted. If there was any defect in the application, it was open to the Appellant to point out the same to the Adjudicating Authority to enable the ‘Operational Creditor’ to cure the defects. However, as there is nothing on the record to suggest that the application under Section 9 of the ‘I&B Code’ preferred by the Respondent-‘Operational Creditor’ was defective, we reject the submission. No merit in this appeal.

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• Service Tax

• 2018 (9) TMI 853
  Prayer for carrying out common investigations - separate investigation at the local levels have been carried out by the authorities against the units at Ahmedabad, Chandigarh, Chennai and Pune. - case of Revenue is that petitioner is not cooperating in the investigation and providing necessary documents - Held that:- It is evident that the nature of investigations carried out in the M/s. Lemon Tree Hotels Ltd. resulted in material and information gathering which are of a different kind. Although the petitioner seeks general directions that common investigations be carried out, the Court is of the opinion that grant of such relief at this stage would not be expedient - Instead, the respondents shall, at a later stage of the investigation, nominate a senior officer or Commissioner to review the evidence gathered in order to purely discern if common approach is essential, after which the investigations may be concluded and the Show Cause Notices (SCNs) issued by appropriate competent authorities. In view of the pendency of investigation and having regard to the interim order made, it is clarified that the period during which the said order operated, i.e. from 08.03.2018 till date shall be excluded from computing the period of limitation for issuing the Show Cause Notices. Petition disposed off.

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• 2018 (9) TMI 836
  Maintainability of appeal - Classification of service - Container Freight Station - Storage and warehousing services or Cargo handling services? - Scope of Cargo Handling Services - whether the consideration which is received under the head “Cargo Handling” services is in fact consideration received for services classifiable under “Storage and Warehousing” services as contended by the Revenue? Held that:- In view of Section 35G(1) of the Act which specifically prohibits an appeal being entertained by this Court, if it is an order of the Tribunal relating amongst other things to the determination of any question having arisen on account of “rate duty” or the “value of goods” for the purposes of assessment - the appeal is not maintainable. The contention of the Appellant that Section 35G of the Act, has no application to the Finance Act, 1994 is on the basis of Section 35E of the Act is not referred to in Section 83 of the Act. This is so as Section 83 of the Finance Act, 1994 only makes reference to such provisions of the statute, which are in force. In fact, it specifically refers to Section 35G of the Act. Thus, we find no merit in the above submission. This appeal is not maintainable before this Court and the remedy, if any, to the appellant is to file an appeal before the Hon'ble Supreme Court under Section 35L(1)(b) of the Act - appeal disposed off.

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• 2018 (9) TMI 835
  Bail application - amount of service tax collected from customers not paid to Revenue - Held that:- Considering the nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, reasonable apprehension of tampering with the witnesses and prima facie satisfaction of the Court in support of the charge, the applicant is entitled to be released on bail in this case - application allowed.

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• 2018 (9) TMI 834
  Condonation of delay in filing appeal - power of appellate authority to condone delay - Held that:- Admittedly the appeal was filed beyond time, however, in the facts and circumstances we are of the considered opinion that the delay was not occasioned because of any fault on the part of the petitioner but was due to circumstances which was beyond his control. However since the Act does not empowers the appellate authority to condone the delay 30 days beyond the prescribed limitation, no illegality is found to have been committed by the appellate authority however in the interest of justice we feel that the petitioner is entitled to be afforded an opportunity of hearing on merits - petition disposed off.

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• 2018 (9) TMI 833
  Clearing and forwarding agency service - service with reference to loading, unloading, transportation, storage of cargo for M/s. Binani Cement Ltd. - Whether, the Tribunal was justified in holding that the service rendered by the appellant falls in the category of clearing and forwarding and liable to pay service tax as per the section 65(105((j) of the Finance Act, 1944? - Extended period of limitation. Held that:- From the clause which is reproduced hereinabove, it is very clear that the appellant herein was only responsible for the handling of the work at the depot and in view of clause(10) of the circular they were not involved in the manufacturing activity - Even otherwise, in view of the decision of Punjab and Haryana High Court in Kulcip Medicines (P) LTD. [2009 (2) TMI 89 - Punjab and Haryana High Court] which has been followed in Narottam & Company [2013 (8) TMI 291 - CESTAT NEW DELHI], we are of the opinion that the case of the appellant herein is identically situated, therefore, both the questions are required to be answered in favour of the assessee against the department. It was held in the above mentioned cases that the activity of the appellant is only of forwarding and not clearing and forwarding, the only activity done by him is (a) providing labour for unloading of the goods at the rail heads, loading into the trucks for transport from rail-head to godown and unloading and stacking of the cement at the godown (b) arranging the dispatch of the goods as per the instructions and maintaining record of receipt and dispatch, and service tax not payable under Clearing and forwarding agent service. Appeal allowed - decided in favor of assessee.

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• 2018 (9) TMI 832
  Advertisement services - sub-contract - Sale of space or time for advertisement - Held that:- Admittedly appellant paying taxes under the head of sale of space or time for advertisement for the activities in the period subsequent to the period under dispute. Their sole difference is that M/s. SFIL had paid tax on the entire amount received by them under the head of Advertising Agency and the value for which these proceeding has been initiated are already included in the following for which SFIL has claimed to have discharged the liability - the argument is based on the certificate given by financial Controller of Frontiers Group (India) Pvt. Ltd. dated 14/08/2009 to the effect that the Frontiers Group (India) Pvt. Ltd. had already discharged the service tax liability on the Revenue realized by them. The certificate nowhere states that they have discharged the liability on the entire amount received by them without any reduction on account of any expenses/abatements. From the said certificate it is also not clear if they had realized the entire amount and if the amount on which they have paid the exceeded the amount paid to the appellant - demand upheld. Levy of service tax - Revenue collected by printing advertisement behind the tickets - Held that:- The space and time on LED screen belong to the appellant and they have allowed advertisement on the same by various advertisers and received Revenue on that account. This definitely constitute sale of space or time for advertisement. The demand on these accounts is also upheld. Penalties u/s 76 - Held that:- The law laid down is very clear and there is no scope for interpretation. The penalty under section 76 is also sustained. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 831
  CENVAT Credit - input services - works contract service after 01.04.2011 - Held that:- It is not in dispute that appellant had availed CENVAT credit on works contract services during the relevant period and that they were not eligible to avail the credit on works contract if they were used for the two purposes specified in the exclusion part of the definition of input services under Rule 2(l) of the CENAVT Credit Rules, 2004. Appellant also concedes that they had wrongly taken credit but argues that all the invoices on which they have taken credit do not fall under the exclusion category. This is the factual matter to be verified by the original authority and find it a fit case to be remanded back to him for the purpose. Appeal allowed by way of remand.

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• 2018 (9) TMI 830
  Restoration of appeal - pre-deposit - appeal was dismissed for non-compliance with pre-deposit - Held that:- This application for restoration of appeal was listed before the Bench for disposal on 23.01.2018 on which date revenue sought some time to confirm whether the pre-deposit as directed by the Bench was deposited or otherwise, when it was brought to the notice of the departmental representative that Hon'ble High Court has recorded the same. Subsequently, the matter was listed many times and on 25.07.2018, revenue was not able to provide any order from the High Court except for the stating that review petition was filed on 23.02.2018. There being a categorical recordings of the amounts as ordered by the Tribunal has been deposited, we allow the application for restoration of appeal - appeal restored.

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• 2018 (9) TMI 829
  Construction of residential complex service - non-payment of service tax - period from 1.10.2007 to 31.3.2008 - bonafide belief - demand alongwith penalty - Held that:- It is brought out from evidence that there is no intention to evade payment of service and that it was only a delay in payment of service tax. Further, during the relevant period, the issue whether the construction of residential complex service was taxable was under much dispute and being an interpretational issue, the contention of the appellant that they had bonafide belief regarding the classification and payment of service tax is not without force. The appellant has brought out a reasonable cause for non-payment of service tax and it is a fit case for invocation of section 80 of the Finance Act, 1994 - penalty set aside - remaining demand upheld. Appeal allowed in part.

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• 2018 (9) TMI 828
  Valuation - renting of immovable property service - inclusion of value of taxable services of interest accrued on security deposit paid in connection with renting of immovable property - Held that:- Tribunal in the case of K. Raheja Corporation Pvt. Ltd. Vs. CCE, Pune [2015 (2) TMI 886 - CESTAT MUMBAI] has held that interest accrued on such security deposit cannot be added to the renting agreed upon between the parties for the purpose of levy of service tax under the category of renting of immovable property - demand set aside. Penalties - Held that:- All the disputes being only interpretational, there cannot be any penalty and hence the penalties imposed in the impugned order under the Finance Act, 1994 are set aside. Appeal allowed in part.

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• 2018 (9) TMI 827
  Commercial coaching and training institute services - collecting an amount for teaching English language during the period 01.07.2003 to 08.09.2006 - Demand of Service Tax - Held that:- Tribunal in identical st of facts in the case of Ulhas Vasant Bapat Vs CCE Pune [2013 (10) TMI 582 - CESTAT MUMBAI] held that English teaching/ training does not amount to vocational training, accordingly held against the appellant therein - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 826
  GTA Service - case of appellant is that the tax liability has indeed been discharged by the service providers and that they are in a position to submit all necessary evidence to establish their case - Held that:- The appellants should be given an opportunity to establish their averment that the service tax liability concerned has already been discharged by the service provider - matter remanded to the original adjudicating authority - appeal allowed by way of remand.

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• 2018 (9) TMI 825
  Penalties - payment of service tax with interest before issuance of SCN - whether in the given facts of the case, the appellants can be extended the beneficial provision of Section 80 of the Act so as to waive the penalties imposed on them under Section 76 and 77 ibid? - Held that:- In the impugned order, a clear chit has been given to the appellant that there was no mala fide intention on their part and that proviso to Section 73(1) of the Act has been invoked without any evidence. As the Department has not come in appeal against this finding of the Commissioner and subsequent decision not to impose penalty under Section 78 ibid., it would only be presumed that the Department has accepted the impugned order in toto, including the said findings - Once it has been held that service tax has not been paid on account of fraud or collusion or wilful misstatement or suppression of facts, etc., with intention to evade payment of service tax, the provisions of Section 73(3) of the Act would hold sway in the case of the appellant and, in fact, as per the provisions of that Section, on the basis of tax ascertained by the Department Officer, if the amount is paid up by the appellant before service of a notice on him, there shall not be served any notice under Sub-section 1 of Section 73 ibid. Once no notice was required to be issued, there would be no question of imposition of any penalties on the appellant. The appellant has paid up the service tax belatedly before issuance of SCN. The interest which is in the nature of compensation for the delay in payment, was also paid after issuance of SCN and much before issuing the Order-in-Original. The conduct of the appellant in paying up service tax and interest, and the categoric finding of the Commissioner that there is no intention to evade tax, persuades us to hold that appellant has established reasonable cause for invoking Section 80 of the Act ibid - the penalty imposed under Section 76 requires to be set aside - demand of tax with interest upheld. Appeal allowed in part.

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• Central Excise

• 2018 (9) TMI 824
  Excisability/marketability - Classification of goods - chemical preparations for photographic use - whether classifiable under Chapter 37 heading 3707 of the Central Excise Tariff Act, 1985? - Held that:- The Registry is directed to place the papers and proceedings of the present appeal before the Hon'ble the Chief Justice to obtain suitable directions to place following questions of law before the larger bench of this Court to decide the matter:- (a) Whether the question of taxability or excisability of goods is an issue of rate of duty arising from orders of the Tribunal which are appealable only to the Supreme Court in terms of Section 35L(2) of the Act applies even to appeals from order of the Tribunal passed prior to 6th August, 2014 (i.e. the date of insertion of Sub-section (2) to Section 35L of the Act)? - (b) Whether the amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) therein, is clarificatory or prospective in nature? Matter referred to Larger Bench.

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• 2018 (9) TMI 823
  CENVAT Credit - common inputs used in manufacture of taxable as well as exempt goods - Rule 6 (3) (i) of the Cenvat Credit Rules, 2004 - crux of the argument of appellant is that there was no need to give retrospective effect to the amendment carried out by the notification dated 27.02.2010 because this notification substitutes the original provision of Clause (vii) of sub-rule (6) of Rule 6 of the Rules of 2004, which itself was inserted vide Notification dated 28.01.2005. Held that:- The learned CESTAT, New Delhi, considered the judgment rendered in the case of S.P. Fabricators Pvt. Ltd. Vs. CCE, Belapur [2013 (9) TMI 1108 - CESTAT MUMBAI] held that said decision is regarding applicability of exclusion made under Rule 6 (6) on SEZ developers, therefore, the amendment by such notification brought into new type of clearance of exclusion under Rule 6 (6). In absence of indication to the effect in the statutory provision it cannot be held that said amendment should be considered as retrospectively. Appeal dismissed.

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• 2018 (9) TMI 822
  CENVAT Credit - input/input service used in Captive power plant - captive consumption of power generated - electricity generated partly consumed captively and partly supplied to other plants - Whether the ld. CESTAT was right in law in holding that the assessee was entitled to avail the full credit of Excise Duty/service tax paid on input/input services under in their captive power plant when all the power generated through the captive power plant was not used by them for the manufacture of finished goods but part of the power generated was also supplied/wheeled out to the other plants? Held that:- Revenue placed reliance in the case of Supreme Court in Maruti Suzuki India Limited [2009 (8) TMI 14 - SUPREME COURT] where SC came to the conclusion that if the product namely electricity sold to third party or even sister concern, then it will not be entitled to Cenvat credit - the judgement do not apply to the facts of the present case, and CENVAT credit cannot be denied. Reliance placed in the case of Hindustan Zinc Ltd. vs. CCE Jaipur-II [2017 (4) TMI 841 - CESTAT NEW DELHI], where it was held that the electricity has been used in the manufacture of dutiable final products and also the fact that all units belong to the appellant the denial of credit is not justifiable. The decision which is taken by the Tribunal that the captive power plant of the sister concern, the same is against the fuel and fuel is used for the sister concern which is a part of the company itself. In that view of the matter, we are of the considered opinion that the view taken by the Tribunal is just and proper - credit remains allowed. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 821
  Principles of Natural Justice - Request of the appellant to cross examining the person declined - Held that:- The Department has just issued a Show Cause Notice which is based on prima facie material and is nothing more than constituting a prima facie opinion. At the stage of Show Cause Notice, there is no adjudication. It is only a step in process of adjudication because the Show Cause Notice in itself is not an order of assessment. The said order has to be passed post issuance of Show Cause Notice after affording an opportunity of hearing the parties and after considering the evidence and material which is placed before the adjudicating authority, the Central Excise Commissioner in the present case. The question of cross examination of such persons who are not yet been classified as witness or have not yet been summoned even by the adjudicating authority, does not at all arise. The findings of the Commissioner that the persons for whom cross examination was sought have not even tendered any factual statement, the cross examination is not needed and therefore the same is denied are therefore held to have no infirmity - The appellant is first required to submit his reply to the Show Cause Notice received. No doubt, the absence of his reply will not debar him from cross examining the witnesses but the stage of cross examination is post the examination in chief of a person who has been summoned by the adjudicating authority, in his discretion after satisfying himself qua his requirement to be examined as a witness to prove the allegations of the Show Cause Notice. The request of the appellant in question was a premature request before the Commissionerate hence the Order under challenge needs no interference - The adjudicating authority below/ Commissioner is required to reconsider the request of the appellant at the appropriate stage - appeal disposed off.

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• 2018 (9) TMI 820
  Rectification of mistake - Held that:- The Bench considered and accepted the findings of the First Appellate Authority as dip reading for measurement of quantity of cargo in shore tank should be after the cargo settled down, which would have definitely indicated the correct quantity of the goods received, which was one of the issues has held in the favour of the importer by the Tribunal - Final Order dated 08.09.2017 is correct and there is no error apparent on the face of the record - Application for ROM dismissed.

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• 2018 (9) TMI 819
  Imposition of equivalent penalty u/s 11AC of CEA, 1944 - the entire Order in Original was set aside - Held that:- Since the entire Order-in-Original was contested by the assessee and the demand and penalties are set aside, the appeal filed by the Revenue for imposing penalty does not survive. Revenue needs to be rejected - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 818
  Penalty under Rule 25 read with Sec.11AC - wrongful utilization of CENVAT credit - GTA Services - Held that:- The appellant had cleared goods and had paid Central Excise duty by the due date by wrongly utilizing the CENVAT credit which was taken after the close of the month in violation of Rule 3(4) of the CENVAT Credit Rules, 2004. The show cause notice does not propose to demand Central Excise duty - The penalty under Rule 25 read with Sec.11AC equal to the amount of duty is unsustainable because there is no demand for duty at all and is set aside. Penalty under Rule 15 of CENVAT Credit Rules - contravention of Rule 3(4) - Held that:- The same is imposable but the maximum amount during the relevant period is only Rs. 2,000/-. Therefore, the penalty needs to be restricted to this extent. Interest under Rule 14 of CENVAT Credit Rules, 2004 read with Sec.11AB - Held that:- The CENVAT credit is wrongly taken or utilized, an interest thereon is recoverable under Rule 14 of the CENVAT Credit Rules, 2004 - Interest demand upheld. Appeal allowed in part.

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• 2018 (9) TMI 817
  CENVAT Credit - Capital goods/inputs/input services - period March, 2006 to September, 2008 - denial of credit on the ground that they were availing benefit of N/N. 30/2004-CE - Extended period of Limitation - Held that:- The lower authorities in the impugned order have accepted the fact that the CENVAT credit availed on inputs and input services by the appellant during the period in question has been reversed. To that extent, the appellant had followed the N/N. 30/2004-CE. Capital goods - Held that:- Appellant had during the period in question, initially for two years manufactured goods i.e., Knitted Cotton Fabrics and cleared the same by availing the exemption under Notification No. 30/2004 - on an identical set of facts in the case of Commissioner of Central Excise, Chandigarh Vs. S.T. Cottex Exports Pvt. Ltd., [2011 (1) TMI 491 - PUNJAB & HARYANA HIGH COURT] it was held in favour of assessee, holding that In the case in hand, also, the appellant had specifically informed the Range Superintendent on 18.11.2006 that they would be discharging duty liability on the finished goods i.e., Cotton Knitted Fabrics under Notification No. 29/2004 and also claiming exemption under Notification No. 30/2004 which would in turn mean that they had informed the authorities they intended to use the machines on which CENVAT credit on capital goods were availed for manufacturing of dutiable goods as well as exempted goods - credit remains allowed following the decision of S.T. Cottex Exports Pvt. Ltd. - penalty also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 816
  Rectification of Mistake - Section 35C of the Central Excise Act 1944 - Held that:- By this application Revenue seeks to re-argue the entire case which is not the purport of the provisions of Section 35C of the Central Excise Act 1944 - application for ROM dismissed.

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• 2018 (9) TMI 815
  Rectification of mistake - appeal was dismissed on the ground of delay - power of appellate authority to condone delay beyond 30 days after the expiry of statutory period of 60 days in filing the appeals. Held that:- The claim of the learned counsel that they were engaged in legal proceedings before Higher Authorities had an effect of not filing the appeal before the 1st Appellate authority in time seems to be on a very slippery wicket. The reasoning taken before the 1st Appellate Authority that they had approached the Supreme Court against the dismissal of the application under KVSS hence were under bonafide belief that having deposited an amount directed by the High Court, they were covered by the provisions of Section 14 of the Limitation Act 1963 is also a feeble ground for the simple reason that on receipt of order-in-original, they should have preferred an appeal before the 1st Appellate Authority as per the provisions of Section 35 of the Central Excise Act 1944 which mandates statutory period for filing an appeal with the 1st Appellate Authority within 60 days and further 30 days by seeking application for condoning the delay in filing the appeal before the 1st Appellate Authority, and the litigation entered by them is not directed against adjudication order. The principles laid down u/s 14 of Limitation Act, 1963 will apply - The appellant herein did not approach the appellate against an order u/s 35 of the Central Excise Act 1944, and there being no challenge against the order-in-original before appropriate forum in time, the first appellate authority was correct in dismissing the appeal as hit by limitation. There is no error apparent on the face of the record in the Final Order dated 19/07/2017 - ROM Application dismissed.

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• 2018 (9) TMI 814
  Assessment - provisional or not? - post manufacturing expenses claimed as abatement - Whether the assessment which was kept provisional during the relevant period should be treated as provisional for the limited period of determining the post manufacturing expenses claimed as abatement by the assessee or it should be treated as provisional for all purposes? - Held that:- It is well settled, that assessment which is provisional is provisional for all purposes and all issues can be decided at the time of finalizing the assessment. There is no provision in the Central Excise Act for limited provisional assessment in respect of each aspect of calculation of the assessable value. Unjust enrichment - Provisional assessment - Whether the question of unjust enrichment would apply in the case of provisional assessment for the period prior to introduction amendment of Section 11B of the Act? - Held that:- The constitutional Bench of Apex Court in the case of Mafatlal Industries Ltd., [1996 (12) TMI 50 - SUPREME COURT OF INDIA] it was held that the bar of unjust enrichment would not apply to refunds arising on finalization of provisional assessment for the period prior to the introduction of the concept of unjust enrichment in Section 11B - the assessee herein is entitled to refund as consequence of finalization of provisional assessment. Whether an amount of Rs. 25 lakhs which is claimed by the assessee made during the interim period should also be considered the collected amount of duty during the period of provisional assessment? - Held that:- There cannot be any dispute at all amounts paid before finalizing the assessment. Accordingly, the amount must be taken into consideration. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 813
  Classification of goods - Smyle Thanda Tel - Whether classified as pharmaceutical preparation to be classified under 30.04 of CETH or to be classified as Hair Oil under 30.04 of CETH? - Held that:- There is no doubt that the ingredients of the product in question are mentioned in authentic ayurvedic texts. As far as the users are concerned, there is nothing on the packet to show that the product is meant for daily use. It shows that it gives relief from headaches fatigue and stress. In an identical case, in the case of Nuzen Herbal Pvt. Ltd., [2018 (5) TMI 210 - CESTAT HYDERABAD], it was held the product should be classified as ayurvedic medicine. The product in question is rightly classifiable as ayurvedic medicine - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 812
  100% EOU - Benefit of N/N. 22/2006 CE - whether a 100% EOU, who clears the goods to domestic tariff area on payment of VAT, are entitled to benefit of N/N. 22/2006 CE which exempts goods cleared to domestic tariff area from the SAD? Held that:- Para 6.8 (h) of FTP refers to full duties which would obviously, mean full duties as applicable. If an exemption notification is available, this para does not place any restriction on its applicability - the demand is not sustainable and neither are the interest and penalties - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 811
  Demand of Interest and penalties - CENVAT Credit taken wrongly but reversed subsequently - procured inputs from 100% EOU - restrictions as per the formula prescribed under Rule 3 (7) (A) of the Cenvat Credit Rules, 2004 not followed - Held that:- Where wrong Cenvat credit taken inadvertently, if reversed subsequently, and the balance Cenvat credit on the date of reversal is more than the disputed quantum of credit, there cannot be any demand for interest on the assessee and also no imposition of penalty either. During the months of January and February 2009, when the credit balances of the respondent were much lower than the quantum of excess Cenvat credit, taken erroneously, the lower appellate authority should have upheld demands to the extent of short fall between the proportionate excess credits availed and the actual credit balance amount available. To this extent, and for these two periods, the respondent will have to discharge interest liability. Only for this purpose, the matter is remanded to the original authority for reworking of the quantum of interest required to be paid by the respondent - penalties set aside. Appeal allowed in part and part matter on remand.

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• 2018 (9) TMI 810
  CENVAT credit - input service - GTA service for transportation of chemical sludge from the factory of the appellant - Held that:- The fact is not in dispute that chemical sludge arising out of manufacturing process is a hazardous waste and its disposal / removal from the factory is not only required for smooth and hassle free manufacturing operations, but also for complying with the requirement of statutory pollution control norms - the service tax paid for transportation of such waste material should be considered as input service, for the purpose of availment of Cenvat benefit - credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 809
  Time limit for passing Order of Assessment - Order of Assessment was set aside as the same had been passed more than 5 years after the close of the assessment year - levy of purchase tax on Sugarcane - Held that:- Assessments in the cases of different assessees for different assessment years in bunch of appeals were framed much after 5 years after the last date for filing of return. For none of the assessment years in bunch of appeals under consideration, writ petitions were pending in this court, which were disposed off - Hence, there was no interim stay. The plea sought to be raised by learned counsel for the State was that in view of the pendency of matters before Hon'ble the Supreme Court and this Court pertaining to the legal issue regarding taxability of sugarcane purchased by the sugar mills from the farmers, the assessment proceedings were kept pending on the request of assessees, however, nothing was pointed out from the record in support thereof, therefore, rejected. No substantial questions of law arise in the present appeals, as the issues have been decided by the Tribunal while rightly appreciating the facts and the legal issues involved - appeal dismissed.

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• 2018 (9) TMI 808
  Condonation of delay in filing appeal - petition was dismissed mainly on the ground of delay - Levy of tax - activity of mine raising, extraction of ores and transportation - pure labor contract - KVAT Act - Held that:- The fact remains that when the right of the parties are involved, this Court exercising powers under Sec. 226 and 227 of Constitution of India can condone the delay . It is relevant to note that the rights of the parties involved in respect of reassessment order which amounts to Rs. 26,15,74,320/-, the appellate Court cannot dismiss the appeal on the ground of technicality. Substantial justice has to be done to the parties - When cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Admittedly, in the present case, the delay is 288 days after deducting 210 days of delay, it would be 78 days in filing the appeal. The present petitioner explained the delay on the ground of illness and has made out exceptional category to exercise the power under Article 226 of the Constitution of India. Delay condoned - matter is remanded to appellate authority to decide the appeal on merits - appeal allowed by way of remand.

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• 2018 (9) TMI 807
  Classification of goods - Clarification dated 11.12.2007 - Whether the petitioner's product is Information Technology product or it is a telecommunication cable? - TNVAT Act, 2006 - CST Act, 1956. Held that:- The first step that has to be undertaken is to examine as to whether the product will fall within Entry 68 of Part B of First schedule to the Tamil Nadu Value Added Tax Act, 2006, which deals with Information Technology Product. For testing this question, the respondent has to necessarily examine the product, its application and all other technical specifications before arriving at a conclusion. Having arrived at a conclusion that it is an Information Technology product, the respondent should consider as to under which entry the product would fall, whether Entry 19 or Entry 20 as submitted by the petitioner - the impugned Assessment orders have to be redone. Matter is remanded to the respondent for fresh consideration to examine the nature of product dealt with by the petitioner and after affording an opportunity of personal hearing - Petition allowed by way of remand.

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• 2018 (9) TMI 806
  Levy of Tax - health care services provided by the petitioner to indoor patients in the hospital - Held that:- The present petition deserves to be allowed while setting aside the order of assessment dated 10.06.2017 (Annexure P-2) as the same is squarely covered by the judgment of Division Bench of this Court passed in M/s Fortis Health Care Limited's case [2015 (2) TMI 1014 - PUNJAB & HARYANA HIGH COURT], where it was held that the medicines in the health care services provided to the indoor patients is not taxable as the amount charged cannot be bifurcated to cull out amount of sale of medicines, even if the amount is separately charged for pharmacy, laboratory services, implants services provided by the doctors as it is a composite medical service provided - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2018 (9) TMI 847
  Enforceability of foreign award - award has not born stamp duty in India - whether the expression “award” would include a foreign award? - Arbitration and Conciliation Act, 1996 - Indian Stamp Act, 1899. Held that:- The only “award” that is referred to in the Indian Stamp Act, 1899 is an award that is made in the territory of British India provided that such award is not made pursuant to a reference made by an order of the Court in the course of a suit. At this point in time, it is important to note that there were several princely states in India governed by sovereign rulers which had their own laws. Arbitration laws, if any, in the aforesaid princely states, if they were to culminate in awards, would not be “awards” under either the Civil Procedure Code, 1882 or the Indian Arbitration Act, 1899. They would therefore be foreign awards insofar as British India is concerned. An award made in a princely state, or in a foreign country, if enforced by means of a suit in British India, would not be covered by the expression “award” contained in Item 12 of Schedule I of the Indian Stamp Act, 1899. Only awards which are decisions in writing by an arbitrator or umpire, made in British India, on a reference made otherwise than by an order of the Court in the course of a suit would be included. “Award” under Item 12 of Schedule I of the Indian Stamp Act, 1899 has remained unchanged till date - this “award” would refer only to a decision in writing by an arbitrator or umpire in a reference not made by an order of the Court in the course of a suit. This would apply only to such award made at the time in British India, and today, after the amendment of Section 1(2) of the Indian Stamp Act, 1899 by Act 43 of 1955, to awards made in the whole of India except the State of Jammu and Kashmir. This being the case, we are of the view that the expression “award” has never included a foreign award from the very inception till date. Consequently, a foreign award not being includible in Schedule I of the Indian Stamp Act, 1899, is not liable for stamp duty. There is no doubt whatsoever that if stamp duties are leviable in India on foreign awards, the imposition should not be substantially more onerous than the stamp duty that is imposed on recognition or enforcement of domestic arbitral awards - The Indian Stamp Act, 1899, being a fiscal statute levying stamp duty on instruments, is also an Act which deals with the economy of India, and would, on a parity of reasoning, be an Act reflecting the fundamental policy of Indian law. The fact that a foreign award has not borne stamp duty under the Indian Stamp Act, 1899 would not render it unenforceable - Appeal dismissed.

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• 2018 (9) TMI 846
  Transfer petitions - Held that:- The transfer petitions are allowed - Let the records of the cases be transferred without delay - Status quo, as of today, shall be maintained in the meantime.

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• 2018 (9) TMI 845
  Smuggling - Charas - appellant s case is that there is non-compliance with Section 42 of the Act - whether Section 50(1) was required to be complied with when charas was recovered only from the bag of the appellant and no charas was found on his person? - whether the requirements of Section 50 were strictly complied with by PW-2 and PW-4? Held that:- PW-2 conducted a search of the bag of the appellant as well as of the appellant s trousers. Therefore, the search conducted by PW-2 was not only of the bag which the appellant was carrying, but also of the appellant s person - Since the search of the person of the appellant was also involved, Section 50 would be attracted in this case. Accordingly, PW-2 was required to comply with the requirements of Section 50(1) - Since the search of the person of the appellant was also involved, Section 50 would be attracted in this case. Accordingly, PW-2 was required to comply with the requirements of Section 50(1). As soon as the search of a person takes place, the requirement of mandatory compliance with Section 50 is attracted, irrespective of whether contraband is recovered from the person of the detainee or not. It was, therefore, imperative for PW-2 to inform the appellant of his legal right to be searched in the presence of either a gazetted officer or a magistrate. The appellant was informed of his legal right to be searched in the presence of a magistrate or a gazetted officer. The appellant opted for the latter alternative. Exhibit-4 is a record of the events after the arrival of PW-4 on the scene. After the arrival of PW-4, the appellant was once again asked by him, whether he wished to be searched in the presence of a gazetted officer or a magistrate. This was the second option which was presented to him - Merely because the appellant was given an option of searching PW-2 before the latter conducted his search, would not vitiate the search. The option given to the appellant of searching PW-2 in the case at hand, before the latter searched the appellant, did not vitiate the process in which a search of the appellant was conducted. The search of the appellant was as a matter of fact conducted in the presence of PW-4, a gazetted officer, in consonance with the voluntary communication made by the appellant to both PW-2 and PW-4. There was strict compliance with the requirements of Section 50(1). Appeal dismissed - decided against appellant.

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• Law of Competition

• 2018 (9) TMI 844
  Review/recall application - Whether the DG’s investigation in the absence of a specific order under Section 26(1) by CCI having formed a prima facie opinion, is vitiated? - Held that:- A plain reading of Section 26(1) shows that at the opinion formation stage regarding existence of a prima facie case needing investigation, CCI should consider the contents of inter alia, information supplied under Section 19(1)(a) and the documents, if any, received with the reference or information. This is a sine qua non for a direction to the DG to investigate into the matter. Consequently while exercising power under Section 26(1), CCI cannot adjudicate upon the merits and de-merits of the allegations in the information. If after examining the contents of the reference or information, the Commission finds that the material produced along with it is not sufficient for forming an opinion about the existence or otherwise of a prima facie case or it wants some clarification on any particular aspect of the matter/issue, it seeks a preliminary conference and invites the complainant/information or other person as is considered necessary for the preliminary conference (Regulation 17 of the 2009 regulations). Thereafter, CCI can pass an order under Section 26(1) briefly stating the reasons for forming an opinion regarding existence of a prima facie case warranting DG’s investigation - the steps outlined in Section 26 are amplified in the procedure mandated by Regulation 20 and 21, which requires participation by “the parties” in the event a report after DG’s inquiry, which is likely to result in an adverse order, under Sections 27-34 of the Act. Consequently Cadila’s argument that a specific order by CCI applying its mind into the role played by it was essential before the DG could have proceeded with the inquiry, is rejected. Rejection of Recall Application - Is the impugned judgment correct in upholding as sound CCI’s finding rejecting the recall application, (based on grounds of fraud, res judicata and/or no cause of action)? - Held that:- Settlement or disposal of individual or some cases might not be determinative of the matter which pertains to abuse of dominance, for the reason that it affects the wider public, just as a crime does. It is like saying that a builder or other service provider who indulges in widespread malpractice that amounts to cheating investors or flat buyers, which is exposed by one complaint, that results in a first information report (FIR) and consequent investigation, that unearths that several other consumers are like preys can be quashed on the ground that the errant service provider settles with the complainant/informant. In such event, the High Court would never exercise its discretion to quash the proceeding emanating from the FIR. Therefore, the CCI or an expert body should ordinarily not be crippled or hamstrung in their efforts by application of technical rules of procedure. Whether there was denial of principles of natural justice in the rejection of Cadila’s request for cross examination? - Held that:- This court notices that the CCI had earlier, in the order, noted that a party can reasonably request for cross examination of individuals whose testimony can adversely affect it and that it has to consider the applications made in such cases, by exercise of discretion - This court is of the opinion that the discretion, which is undoubtedly vested with the CCI to permit or refuse cross examination of a witness, is to be exercised judiciously. The reason for denial of the request for cross examination is that the justification given by Cadila is not “satisfactory” and that the testimony of witnesses who have deposed and whose cross examination is sought, are not relied upon in the DG’s report. This court is of the opinion that such reasons are not germane; mere “dissatisfaction” does not imply judicious exercise of discretion - CCI erred in refusing to grant cross examination (to Cadila) of the three witnesses who had deposed before the DG. Whether DG could have issued notice to Cadila’s officials under Section 48? - Held that:- Cadila’s grievance with respect to issuance of notice to its directors by citing Section 48 is without substance; it is hereby rejected. Appeal allowed in part.

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• Indian Laws

• 2018 (9) TMI 843
  Compounding of Offences - power of Court to compound offences - Section 138 of the Negotiable Instruments Act - Held that:- This is not a case wherein offence for which the petitioner has been charged can strictly be termed to be an offence against the State. On the other hand, continuation of criminal case against the petitioner would put the petitioner to great oppression and prejudice and extreme injustice would be caused to him in case the impugned judgment of conviction and sentence are not set aside. This court is not powerless in such situation and adequate powers have been conferred upon it not only under sections 397 read with Section 401 or Section 482 Cr.P.C. (hereinafter referred to as the Code) but also under Section 147 of the Act for accepting the settlement entered into between the parties and to quash the proceedings arising out of the proceedings, which have consequently culminated into a settlement. This power has been conferred to subserve the ends of justice or/and to prevent abuse of the process of any Court. Petition disposed off.

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• 2018 (9) TMI 842
  Dishonor of Cheque due to insufficiency of funds - Section 138 of Negotiable Instruments Act - Held that:- Once the complainant establishes the factual basis of existence of a legally recoverable debt it is obligatory on the Court to raise the presumption under Section 118 NI Act whereafter the onus shifts to the accused to rebut the same by preponderance of probability whether by leading defence evidence or on the evidence led by the complainant itself. By examining Devender Singh the complainant has proved the source of money available to him and merely because the sale deed was not exhibited by Devender Singh is no ground to come to the conclusion that factual basis for establishing the legal liability has not been discharged. In his cross-examination complainant admitted that he was a stock broker and presently unemployed. The loan of Rs.14,40,000/- was given in cash and he had not shown the same in the Income Tax Return. The same was not withdrawn from any account. He volunteered that he sold a property which was given as a gift to him by his uncle and from the said money he gave the loan to the accused. He admitted that there was no loan agreement between himself and Mr. Sushil Kumar - Complainant tendered his evidence by way of affidavit and the text message was marked as Mark-‘A’ on 17th September, 2014. As per the original record though initially mark Ex.CW-1/7 was put on it however, later as noted in the evidence of the complainant on 17th September, 2014 it was only a marked document. Though the SMS was marked as mark ‘A’ however, in his deposition as DW-1 Santosh Kumar Singh admitted that the SMS mentioned in para-8 of Ex.CW-1/7 to the complainant was sent by him. In case the blank signed cheques were given as security there was no question of the liability to pay as admitted in the SMS as also in the deposition - the fact that the cheque was signed by him even though he gave a blank signed cheque, the learned Trial Court committed an error in not considering this admission of the respondent on oath. Respondent is therefore, convicted for the offence punishable under Section 138 NI Act.

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• 2018 (9) TMI 841
  Dishonor of Cheque with remarks “exceeds arrangement” - repayment of loan - Section 138 of Negotiable Instruments Act - Whether the order of acquittal passed by the Lower Appellate Court is manifestly erroneous warranting interference? Held that:- With regard to the material alteration, the evidence given by D.W.1 is contradictory in nature. In the trial Court, through the evidence of D.W.3, it was established, previous to the date in which the cheque was dishonoured, the respondents issued another 4 cheques for various amounts. Further, the same were acknowledged by the appellant through Ex.P.8. In the trial Court, it was the case of the respondents that the entire due was paid to the appellant through various cheques, for which, the copy of the accounts pertaining to the respondents was marked as Ex.P.6. On close scrutiny of the said document reveals that the cheques contained the serial number earlier to the date, in which, the cheque was issued has been presented and the same was collected. Further, as per Ex.R.7, Rs. 35,000/- was paid to the appellant. Likewise, as per Ex.P.8, Rs. 15,636/- was paid to the appellant through demand draft. The said facts are admitted by the complainant. Furthermore, it is an admitted fact that the date, in which, the cheque was issued is a Holiday. Both the respondents are running the Company, issuing the cheque in the Holiday is also create a doubt, whether the transaction as stated by the appellant had happened or not. Further, at the time of filing the complaint, before the trial Court, the appellant did not enclose the copy of invoice to show his bonafide. However, only during the time of trial, he produced the invoice. In the business community, it is the common practice to receive the blank cheque or filled cheque immediately after sending the materials. But in this case, the evidence of P.W.1 shows such practice is not adopted in this case - The case of the appellant suffers through two reasons; [i] the material alteration stated by the respondents has not been properly explained, and [ii] the respondents raised a reasonable doubt in respect of his liability. Hence, there is no need to interfere with the findings arrived at by the trial Judge. The order of acquittal is hereby confirmed - appeal dismissed.

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• 2018 (9) TMI 840
  Dishonor of Cheque on the ground of “exceeds arrangement” - Section 138 of Negotiable Instruments Act - Held that:- It is clear from the evidence that Dinesh Kumar did not discharge his loan liability, as he failed to pay the installments of the loan. It has also come on record that Dinesh Kumar knew that in case he fails to discharge his financial liability, then the same would be recovered from his father, who stood his guarantor. The accused signed the cheque and he has also not disputed the same. The accused has also admitted that he signed the acknowledgement, through which legal notice qua demand was issued to him. Thus, the above material is suffice to conclude that in order to extinguish the financial liability of Dinesh Kumar, the accused issued cheque amounting to Rs. 2,15,000/-. The next set of evidence establishes that the cheque issued by the accused was dishonoured on the ground of “exceeds arrangement” and despite issuance of notice he could not pay the cheque amount. In fact, after receipt of the notice, the accused did not do anything, thus his sleeping over the financial liability, in itself is a proof that he admitted his liability to pay the cheque amount. Issuance of cheque and admission of signature thereon would invoke presumption of legally enforceable debt in favour of holder and the accused needs to rebut such presumption. However, in the case in hand, the accused failed to rebut such presumption. Petition dismissed.

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• 2018 (9) TMI 839
  Dishonor of cheque due to insufficiency of funds - section 138 of Negotiable Instruments Act - Held that:- It is abundantly clear that an unauthorised partnership firm cannot approach the Court for enforcement of any right arising from a contrat, hence civil proceedings for recovery of money would be barred by virtue of sub Section (2) of Section 69 of the Partnership Act. However, proceedings under Section 138 of the NI Act cannot be treated as civil suit for recovery of cheque amount with interest. The proceedings under Section 138 of the N.I. Act, are not recovery proceedings. Therefore, even an unregistered Partnership firm can maintain a complaint under Section 138 of the Act. Appeal allowed.

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• 2018 (9) TMI 838
  Whether the complaint could have been dismissed for want of prosecution, evidently the petitioner was never issued notice in this case and the notice of appearance was only issued to General Power of Attorney? Held that:- It has to be borne in mind that normally no party would desist or stop from pursuing a complaint involving dishonour of cheque till proved otherwise. That apart, it is always in the interest that the cases should be adjudicated on merits. In my opinion, the learned trial Magistrate has adopted a very strict and unjust attitude resulting in failure of justice - There is yet another reason why the order impugned herein cannot withstand judicial scrutiny and the same is that the learned Magistrate while dismissing the complaint for default has not borne in mind the provisions of Section 256 of the Cr.P.C., which specifically deals with nonappearance or death of the complainant. Revision Petition allowed.

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• 2018 (9) TMI 837
  Payment of donation to the co-operative housing society - transfer of flat in favor buyer - Demand of Rs. 5,00,000/- towards the transfer charges - Whether the amount of Rs. 5,00,000/- was paid voluntarily towards donation? Held that:- When the persons come together with common object of housing, after formation of a Cooperative Society, they are governed under rules and bye-laws of Maharashtra Cooperative Societies Act. So far as the members are concerned, the Cooperative Housing Society can collect or increase its funds only by legally permissible charges or fees. The Society is not expected to indulge into profiteering business from the members and if such amount is earned, then it is taxable under the law. There is no bar for any member to pay donation to the Society, however, it should be voluntary without any compulsion and coercion. No manner the transfer fees can be charged under the pretext of donation. The payment was made by two demand drafts of Rs. 2,50,000/- each on 27th April, 2005 and the said payment was challenged on 29th December, 2005 by filing Dispute No. 398 of 2005 before the Cooperative Court on the ground that it was paid under coercion. Thus, from this conduct of taking immediate steps against the Society and challenging the said transaction, it can be safely concluded that the amount was not a donation but money was a transfer fee paid out of compulsion and it was not voluntary payment. Petition dismissed.

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