Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 18, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
SEBI
- SEBI/HO/IMD/DF2/CIR/P/2020/175 - dated
17-9-2020
Circular on Mutual Funds
Customs
- PUBLIC NOTICE No. 67/2020 - dated
8-9-2020
Launch of e-Office in Air Cargo Complex (Import) Commissionerate, New Delhi
- OFFICE ORDER No. 01/2020 - dated
3-9-2020
Launch of e-Office in 0/0 the Principal Commissioner of Customs, Import, Inland Container Depot, Tughlakabad, New Delhi on 02/09/ 2020
- PUBLIC NOTICE No. 28/2020 - dated
27-8-2020
Revised guidelines for conduct of personal hearings in virtual mode under CGST Act,2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994
- PUBLIC NOTICE No. 29/2020 - dated
27-8-2020
Procedure to be followed in cases of manufacturing or other operations undertaken in special warehouses under section 65 of the Customs Act
- PUBLIC NOTICE No. 47/2020 - dated
26-8-2020
Streamlining of UQCs in Bills of Entry and Shipping Bills
- PUBLIC NOTICE No. 65/2020 - dated
26-8-2020
Guidelines regarding implementation or section 28DA of Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of ()rigin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin
- PUBLIC NOTICE NO. 14/2020 - dated
25-8-2020
Revised guidelines for conduct of personal hearings in virtual mode under CGST Act 2017. IGST Act 2017 Customs Aet 1962 Central Excise Act 1944 and Chapter V of Finance Act, 1994
- Public Notice No. 35 of 2020 - dated
25-8-2020
Launch of e-Office in Customs Commissionerate, Ludhiana from 25.08.2020 (Tuesday)
- PUBLIC NOTICE NO. 28/2020 - dated
24-8-2020
Revised guidelines for conduct of personal hearings in virtual mode under CGST Act, 2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994
- PUBLIC NOTICE No. 64/2020 - dated
24-8-2020
Extension of Deferred payment of Customs duty benefits to 'Authorised Public Undertakings
- PUBLIC NOTICE NO. 37/2020 - dated
3-8-2020
2nd phase of All India roll-out of Faceless Assessment
- PUBLIC NOTICE No. 53/2020 - dated
17-7-2020
Requirement of AGMARK certification prior to import of Blended edible vegetable oils
- Public Notice No. 14/2020 - dated
15-7-2020
Setting up of the Turant Suvidha Kendra (TSK) for faceless assessment
- PUBLIC NOTICE NO. 13/2020-21 - dated
10-7-2020
Rectification of SBOOI error in IGST Refund cases
- PUBLIC NOTICE NO. 12/2020 - dated
8-7-2020
Turant Customs — Turant Suvidha Kendra and Other Initiatives for Contactless Customs
Highlights / Catch Notes
GST
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Classification of supply - Composite Supply or Mixed Supply - wellness facilities / health care services - In fact, there is no option available for the customer to avail the wellness package without opting for the accommodation. Thus, the accommodation service attains the nature of the principal supply and the other two components attain the nature of ancillary services - Benefit of exemption not available - AAR
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Exemption form GST - educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization - Since the conditions of exemption are fulfilled, benefit of exemption from GST is available - AAR
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Exemption from GST - selling of residential flats after date of completion certificate of commercial shops or after first occupancy in building - They have received only partial Building Use permission in respect of commercial units but not for residential units - The activity is not exempt from GST - AAR
Income Tax
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Income by way of fees for technical services - The non-resident company is no where involved either in identification of the exporter or in selecting the material and negotiating the price. The quality of material is also determined by the assessee and the non-resident Indian company is only required to make physical inspection to see if it resembles the quality specified by the assessee. For rendering aforesaid service, no technical knowledge is required. - The activity is not FTS u/s 9(1)(vii) - HC
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Addition u/s 41(1) - It is evident that obtaining of any benefit by the assessee in the form remission or cessation is sine qua non for invoking section 41(1). If the liability continues to exist, the factum of delay in payment does not ipso facto requires addition u/s. 41(1) - CIT(A) rightly deleted the additions - AT
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Penalty u/s 271AAB - surrender of cash and jewellery pursuant to search - Statement recorded u/s 132(4) of the Act itself would not either constitute an incriminating material or ‘’undisclosed income’’ in the absence of any corresponding asset or entry in the seized documents representing the ‘’undisclosed income’’ - No Penalty - AT
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Disallowance of depreciation - capital subsidy received under Technology Upgradation Fund (TUF) scheme - the said capital subsidy need to be directly credited only to capital reserve and not to be reduced from the value of plant and machinery as per Explanation-10 to Section 43(1) of the Act. - AT
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Ad-hoc disallowance - the AO has not followed the procedure prescribed by the statute and therefore, he violated the principle of “Rule of Law” and the action of the AO is arbitrary and therefore, the ad-hoc disallowance of 10% made by the AO cannot be allowed. - AT
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Bogus purchases - AO estimated 10% of the bogus purchase - CIT (A) enhanced the addition - producing the bills and vouchers and evidencing the payment made through cheque alone will not establish that the transactions are genuine - Additions of 10% made by AO confirmed. - AT
Customs
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Levy of personal penalty for abetment - Quantum of Penalty - Section 114 of the Customs Act - in order to hold that the appellant has abetted in the commission of the offence, there has to be a knowledge on the part of the appellant regarding the illegal activities of the exporter whereas in the present case no corroborative evidence has come on record which pinpoint that the appellant had the knowledge of the illegal activities of the exporter company. - AT
Indian Laws
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Dishonor of Cheque - vicarious liability of Director - the petitioner is being implicated as third accused who is inducted as Non Executive Director of the first accused company, therefore the petitioner is not being made responsible for the day to day affairs of the company and she cannot be held liable vicariously for the offence committed by the company. - HC
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Dishonor of Cheque - the fact that despite the petitioner having been put on notice as regards production of the invoices even duplicate/Xerox, the petitioner has chosen not to produce them would establish that there is no transaction in respect of this particular amount relatable to liquor as contended by the petitioner - Thus, it cannot be contended that the cheque has been issued in discharge of a legally valid debt by the respondents to the petitioner. - HC
IBC
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Restoration of company petition seeking initiation of CIRP - In view of another petition, the fist petitioner was asked to approach IRP for further action - effect of Withdrawal of another Company Petition - the Company Petitioner cannot be left in the lurch for none of its dereliction. An Application for restoration of the Company Petition is sought as a matter of prudence and practice - Petition restored - Tri
Case Laws:
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GST
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2020 (9) TMI 634
Classification of supply - Composite Supply or Mixed Supply - Benefit of entry No.74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - Applicability of Clinical Establishment Act, 2010 - wellness facilities are provided with the help of highly qualified professionals doctors in the field of naturopathy, researchers, and support staff - Pre and Post GST regime - registration under Service Tax - HELD THAT:- The entire package consists of the above 3 components and the packages would not be possible without any one of the 3 components. In other words, the packages offered by the applicant are naturally bundled and would be aptly covered under the definition of Composite Supply. Further, the principal supply would be the accommodation services since the therapy can in no way be administered without accommodation. In fact, there is no option available for the customer to avail the wellness package without opting for the accommodation. Thus, the accommodation service attains the nature of the principal supply and the other two components attain the nature of ancillary services. Classification - liability of tax - HELD THAT:- In view of Section 8 of the CGST Act, 2017, it can be seen that a composite supply comprising of two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. Therefore, in the instant case, the composite supply of services would be treated as a supply of accommodation service falling under Heading 9963 and specific heading 996311 (Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like) as per Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 - The composite supply of service provided by the applicant would be covered under Entry No. 7(vi) and 7(viii) of Notification No.11/2017-Central Tax (Rate). As per Entry No. 7(vi) above, rate of GST would be 18%(9% SGST + 9% CGST) in case of units having declared tariff rates of more than ₹ 2,500/- and less than ₹ 7,500/-, whereas as per Sr.7(viii) above, rate of GST would be 28%(14% SGST + 14% CGST) in case of units having declared tariff rates of ₹ 7,500/- or more. The said notification has been amended a few times vide Notification No.13/2018-Central Tax (Rate) dated 26.07.2018 and Notification No.20/2019-Central Tax (Rate) dated 30.09.2019, where the rates of GST have been altered. These amendments will have to be taken into consideration by the applicant, while discharging their service tax liabilities. Whether the applicant is eligible to get the benefit of entry No.74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The supply of services mentioned at Sr.No.74 of the aforementioned Notification pertain to: (a) Services by way of-(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. The said services, which are classified under Heading 9993, have been exempt from payment of GST. Thus, the supply of services provided by the applicant, which is a composite supply, has been classified under Sub-Heading No.996311 under Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like . The exemption at Entry No.74 of Exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 is applicable to services falling under the Heading 9993. However, the nature of services provided by the applicant is covered under the Sub-Heading 996311 - the exemption available at Entry No.74 of Exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the applicant.
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2020 (9) TMI 633
Exemption form GST - educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization - exemption under Sr. No. 66(b)(iv) of the Not. No. 12/2017-CT (rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGST Notification - HELD THAT:- The applicant has to satisfy following two conditions in order to be eligible for exemption under Sr. No. 66(b)(iv): (i) The recipient of the services should be Educational Institution as defined under the clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate). (ii) the supply of service should be in relation to the examination conducted by the educational institution. The applicant has stated that they are supplying ASSET multiple question to the Schools for the students of 3rd to 10th Standard. Therefore, such schools are already covered under the definition of Educational Institution , as provided under sub-clause (i) of clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate). It is found that schools are providing education to the students up to higher secondary standard and therefore fall under the definition of Educational Institution as defined vide clause (y) of Paragraph 2 of the said Notification. Whether the conditions mandated by entry 66 (b) (iv) of notification 12/2017-Central Tax as reproduced are fulfilled or not as far as the services relating to conduct of examination by, such institution; up to higher secondary? - HELD THAT:- It comes out that schools taking ASSET will use its results for its examination process and overall assessment of the students. The Schools uses ASSET for the purpose of assessment and diagnostic assessment of its students. ASSET uses multiple choice question to focus on measuring how well SKILLS and CONCEPTS have been understood by the students. The basic nature of ASSET service is an examination to be conducted by Education Institution (School) but outsourced to the Educational Initiatives (EI). We also find from the submissions of applicant that ASSET is an educational assessment exam taken at school and it does not envisage any kind of coaching and/or training of teachers or administrators - under ASSET, they provide a set of questions on various subjects which are set by them based on the class level, board (like state or CBSE or ICSE etc) and the methodology adapted by the school for teaching. We find from the sample copies of agreements submitted by the applicant that they make contract with the Schools for supply of ASSET multiple questions of various subjects to their students. Thus, the services have been provided to the schools in relation to conduct of examination of students by such educational Institutes - InUNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [ 2003 (10) TMI 47 - SUPREME COURT ] Honorable Supreme Court, while interpreting the term relating to and in relation to , has assigned wide and broad view of the term. Therefore, the second condition for availing the exemption has also been satisfied in the instant matter. Thus, exemption is available in respect of ASSET services provided to educational institution.
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2020 (9) TMI 632
Exemption from GST - selling of residential flats after date of completion certificate of commercial shops or after first occupancy in building - reversal of ITC on expenses incurred up to date of completion certificate shops - ITC on expenses incurred after date of completion certificate of commercial shops. Whether selling of residential flats after date of completion certificate of commercial shops or after first occupancy in building is exempt supply? - HELD THAT:- during the personal hearing, the applicant himself stated that they didn t receive Completion Certificate in respect of their residential building (units). They have received only partial Building Use permission in respect of commercial units but not for residential units The applicant has received part Building Used Permission for the commercial Shops of Ground and First Floor and not for the Residential Flat. Accordingly, since no Building used permission has been issued by the competent authority in respect of residential flat and since no residential unit has been occupied by prospective buyer, supply of residential flats shall be treated as supply of service in terms Para 5(b) of Schedule-II of CGST Act, 2017. Manner of reversal of ITC on expenses incurred up to date of completion certificate shops - HELD THAT:- It is to rule that the manner of reversal of ITC on expenses incurred up to date of completion certificate shops is provided in Rule 42 and Rule 43 of CGST Act, 2017 read with Notification No. 16/2019-CT dated 29.03.2019. Manner of claiming ITC on expenses incurred after date of completion certificate of commercial shops - HELD THAT:- The manner of claiming Input Tax Credit has been provided under Sections 16 and 17 of CGST Act, 2017 read with Rules 42 and 43 of CGST Rules, 2017 read with Notification No. 16/2019-CT dated 29.03.2019.
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2020 (9) TMI 631
Maintainability of petition - availability of alternative remedy - appealable order or not - Section 107 of the Goods and Services Act, 2017 - refund claim - HELD THAT:- The aforesaid order is appealable under Section 107 of the Goods and Services Act, 2017, and no writ petition ought to be entertained in respect thereof - As there is an alternative remedy available to this petitioner, we are not inclined to entertain the prayer qua order dated 17th June, 2020. The petitioner is at liberty to prefer an appeal in accordance with law before the appropriate forum. Refund claim - HELD THAT:- So far as the second claim of refund of ₹7,68,938/- is concerned, which was made on 23rd January, 2020 (Annexure P-3 to the memo of this petition), the same is yet to be decided by the respondents. The concerned respondent-authorities are directed to decide the refund application dated 23rd January, 2020 preferred by this petitioner, which is at Annexure P-3, in accordance with law, rules, regulations and Government policies applicable to the facts of the case within a period of three weeks from today, after giving adequate opportunity of being heard to the concerned party - petition disposed off.
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Income Tax
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2020 (9) TMI 630
Entitled to the exemption u/s 10(23FB) - Security Transaction Tax [STT] liability was borne by the Venture Capital Fund and not by the assessee - HELD THAT:- Under Section 115U(5) the income received by the Venture Capital Fund is taxable on accrual basis, whether distributable or not to the investor and therefore, the exemption under Section 10(38) is not claimed on the distribution as stated by the Assessing Officer in its order. This submission was taken note of and the CIT(A) has recorded the factual finding that STT paid on the transaction is borne by the assessee and the same was debited to the account of the assessee by the Venture Capital Fund as admitted by the Assessing Officer himself in the Assessment Order. Taking note of the decision of the Delhi Tribunal in the case of Japan International Cooperative Agency [ 2016 (2) TMI 882 - ITAT DELHI] the issue was decided in favour of the assessee. The correctness of the factual finding recorded by the CIT(A) was tested by the Tribunal as well as noting the provision of Section 10(23FB) and Section 115(U) . After taking note of the factual position, the Tribunal affirmed the order passed by the CIT(A). Thus we find there is no Substantial Question of Law arises for consideration in this appeal as the entire matter revolves on factual aspects which was not only endorsed by the AO while denying the relief. This error was corrected by the CIT(A) and affirmed by the Tribunal. Hence no ground is made out by the Revenue to interfere with the order passed by the Tribunal. - Decided against revenue.
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2020 (9) TMI 629
Income by way of fees for technical services - whether the fee made by the assessee to non resident company is in the nature of technical services and would be covered under the scope and ambit of Explanation 2 to Section 9(1)(vii) ? - HELD THAT:- The services have been described in the agreement dated 01.03.2006 as information and tracking services. Under the agreement, the non- resident company is required to ensure coordination with the suppliers, so that goods are shipped on time and to undertake necessary coordination and ensure that correct quantity and quality of goods are shipped to assessee. Assessee in consultation with the exporters identifies the manufacturers as well as the quality and price of the material to be imported. The non-resident company is no where involved either in identification of the exporter or in selecting the material and negotiating the price. The quality of material is also determined by the assessee and the non-resident Indian company is only required to make physical inspection to see if it resembles the quality specified by the assessee. For rendering aforesaid service, no technical knowledge is required. Tribunal on the basis of meticulous appreciation of evidence on record, has recorded a finding that non-resident company is not rendering any consultancy service to the assessee. The same would not fall within the services contemplated under Section 9(1)(vii) - The aforesaid finding of fact is based on meticulous appreciation of evidence on record and cannot be termed as perverse. It is pertinent to mention here that even in memo of appeal, no ground has been urged with regard to perversity of the aforesaid finding. - Decided against the revenue.
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2020 (9) TMI 628
Entitlement to claim deduction u/s. 10B - manufacturing activities - whether assessee is only polishing the crystals and thereafter assembling the glass and crystals and the process undertaken by the assessee would not bring anything new into existence? - HELD THAT:- Substantial question of law has been answered by a Bench of this Court in SAINT GOBAIN CRYSTALS DETECTORS INDIA (P.) LTD. [ 2015 (5) TMI 686 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2020 (9) TMI 627
Addition u/s 41(1) - liability outstanding in the books of the assessee towards sundry creditors - CIT(A) deleted the addition partly - HELD THAT:- The assessee is not in appeal against the confirmation of additions by the ld. CIT(A) in respect of both the parties to the extent noted above. Except for these two parties, the AO, in the remand proceedings, did not point out any inconsistency calling for the applicability of section 41(1). This section, in turn, states that where an allowance or deduction has been made in the assessment for any year in respect of loss or expenditure or trading liability incurred by the assessee and subsequently the assessee obtains some benefit in respect of such trading liability etc. by way of remission or cessation thereof, the amount of benefit obtained by the assessee becomes income u/s. 41(1). It is evident that obtaining of any benefit by the assessee in the form remission or cessation is sine qua non for invoking section 41(1). If the liability continues to exist, the factum of delay in payment does not ipso facto requires addition u/s. 41(1). We are confronted with a situation in which the assessee categorically stated before the AO that all the creditors were genuinely payable and there were some transactions in their accounts as well. CIT(A) was justified in coming to the conclusion that addition was not called for u/s.41(1) of the Act pro tanto. - Decided against revenue.
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2020 (9) TMI 626
Exemption u/s 11 - Charitable u/s 2(15) - activities of the assessee trust, viz. holding conventions, exhibitions etc. were to be construed as being in the nature of trade, commerce or business - main objects of the assessee trust after vetting of which it was registered as a charitable trust by the DIT(Exemption), Mumbai, u/s 12A, vide his order dated 25.11.1999 - HELD THAT:- As pointed out by the A.R, and rightly so, the term deposits of ₹ 13.65 crores referred to by the A.O were the term deposits accumulated by the assessee trust over a period of 15 years i.e since the year 1999, and therefore, merely on the ground of having such huge term deposits the assessee s entitlement towards claim of deduction u/s 11 could not have been denied. We are in agreement with the claim of the ld. A.R, that as per clause (iii) of Sec. 11(5) of the Act, deposit of money in any account with a scheduled bank is one of the prescribed form and mode of depositing the money referred to in clause (b) of sub-section (2) to Sec. 11. Accordingly, not being able to persuade ourselves to subscribe to the view taken by the A.O that as the assessee over the years had invested surplus aggregating in term deposits with the banks, it was thus be concluded that it was working with a profit motive, we vacate the said observation. We may herein observe that the narrowing of the definition of charitable purpose as contemplated in Sec. 2(15) insofar the same is related to advancement of any other object of general public utility , was carried out by the legislature by way of an insertion of a proviso , vide the Finance Act, 2009 w.e.f 01.04.2009. Assessments in the case of the assessee trust for A.Ys 2010-11 to A.Y 2013-14 were framed u/s 143(3), and its claim for deduction u/s 11 after being tested in the backdrop of the amended definition of charitable purpose , and also, the proviso that supplemented the said definition, were in both the years found by the revenue to be in order. Revenue while framing the assessment for the aforementioned preceding years had not held the activities of the assessee trust as being in the nature of trade, commerce or business, or those of rendering of any services in relation to any trade, commerce or business. Nothing is either discernible from the records which would reveal that the activities of the assessee trust had witnessed any change during the year in question as in comparison to those for the aforementioned preceding years, nor any contention to the said effect had been advanced by the ld. D.R before us. Accordingly consistent view taken by the revenue in the case of the assessee for the preceding years, we are of a strong conviction that the lower authorities had erred in concluding that as the activities of the assessee trust being in the nature of trade, business or commerce were thus not carried out for a charitable purpose within the meaning of Sec. 2(15) of the Act, it was therefore disentitled for claim of deduction u/s 11. As such, we vacate the order of the CIT(A), and therein direct the A.O to allow the assessee s claim for deduction u/s 11. - Decided in favour of assessee.
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2020 (9) TMI 625
Deduction u/s 80P(2)(a)(i) - Assessee were essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 01.04.2007, the assessee will not be entitled to deduction u/s 80P - HELD THAT:- Narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. At the time of assessment, the judgment of the Hon ble jurisdictional High Court in the case of Chirakkal Service Cooperative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT ] was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P. In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT ] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not.
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2020 (9) TMI 624
Deduction u/s 80P(2)(a)(i) - assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to deduction - HELD THAT:- In the light of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) of the I.T.Act. For the above said purpose, the issue raised in these appeals is restored to the files of the Assessing Officer. Appeal filed by the assessee is allowed for statistical purposes.
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2020 (9) TMI 623
Deduction u/s 80P(2)(a)(i) - assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 01.04.2007, the assessee will not be entitled to deduction u/s 80P - HELD THAT:- In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT ] we are of the view that there should be fresh examination by the AO as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Cooperative Societies Act, 1969, before denying the claim of deduction u/s 80P(2). For the above said purpose, the issue raised in these appeals is restored to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee-society by following the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) and shall take a decision in accordance with law. Appeals filed by the assessee are allowed for statistical purposes.
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2020 (9) TMI 622
Penalty u/s 271AAB - surrender of cash and jewellery pursuant to search - HELD THAT:- When the Department has not made any efforts to ascertain the year of acquisition of the jewellery and then to apply the rates as prevailing in the year of acquisition and some of the jewellery even not acquired by the assessee or the family members but is inherited, then the manner in which the disclosure is obtained on account of the jewellery would not represent the undisclosed income as defined in explanation to Section 271AAB. We find that the order of the AO u/s 271AAB. We find that the order of the AO u/s 271AAB as well as the order of the ld. CIT(A) are silent on the issue of incorrect valuation as well as the timing of acquiring of the personal jewellery of the assessee and the family members. Personal jewellery of the assessee and the family members acquired in the past and some part of which was also inherited, will not fall in the ambit of undisclosed income . Statement recorded u/s 132(4) of the Act itself would not either constitute an incriminating material or undisclosed income in the absence of any corresponding asset or entry in the seized documents representing the undisclosed income . Accordingly, the penalty levied by the AO on account of cash found and on account of unexplained jewellery stand deleted. Thus the appeal of the assessee is allowed. Therefore, while applying the principles in the case of Shri Gopal Das Sokhiya [ 2019 (4) TMI 1300 - ITAT JAIPUR] wherein the facts were similar, we are of the considered view that penalty levied by the AO against such disclosure is not sustainable. It may be pertinent to mention that the statement recorded u/s 132(4) of the Act itself would not either constitute an incriminating material or undisclosed income in the absence of any corresponding asset or entry in the seized documents representing the undisclosed income . Penalty levied by the AO on account of cash found and on account of unexplained jewellery stand deleted. Penalty u/s 271AAB(1)(c) - advances paid by the assessee - HELD THAT:- In the definition of undisclosed income where it talks about income by way of any entry in the books of account or other documents or transactions found in the course of a search under section 132 , what perhaps has been envisaged by the legislature is an inflow of funds in the hands of the assessee which has been found by way of any entry in the books of accounts or other documents, and which has not been recorded before the date of search in the books of accounts or other documents maintained by the assessee in the normal course and not vice-versa. We are also conscious of the fact that there are deeming provisions in terms of section 69 and 69B wherein such amounts may be deemed as income in absence of satisfactory explanation. No new facts or circumstances have been brought before us by the Revenue in order to controvert or rebut the lawful findings so recorded by the ld. CIT(A). - Decided against revenue.
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2020 (9) TMI 621
Bogus purchases u/s 69C - purchases allegedly made by the assessee from the concerned Hawala parties as unexplained expenditure - CIT-A restricted addition to 3% - HELD THAT:- Disallowance of 3% made by the CIT(A) of the purchases in dispute is fair and reasonable and there is no justifiable reasons to interfere with the same. We accordingly uphold the impugned order of the ld. CIT(A) giving relief to the assessee on this issue and dismiss this appeal of the Revenue.
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2020 (9) TMI 620
Condonation of delay - Notification being No. 11/2016 (F. No. 149/150/2015-TPL dated 01.03.2016 and CBDT Circular No. 20/2016 dated 26.05.2016 which has claimed to be not followed by the assessee - HELD THAT:- As observed that the issuing of Circular of CBDT for extending the date of filing the appeal implicit constraint and elucidate the hiccup in uploading the prescribed appeal in the system electronically. In that particular case though the appeal was filed earlier the same could not be uploaded electronically due to ignorance of technical knowledge. Since there is a bona fide reasonable cause for not filing the appeal electronically by the assessee, in turn the Co-ordinate Bench has not appreciated the dismissal of appeal made by the Ld. CIT(A). Having regard to the identical fact, in the instant case, we find no reason but to appreciate the difficulty faced by the assessee in preferring such appeal electronically within the prescribed time period and dismissal of the appeal by the Ld. CIT(A) in not considering the same is grossly irregular and arbitrary. Hence, the order of dismissal of the appeal on the ground of limitation by the Ld. CIT(A) as impugned before us is hereby quashed. Disallowance of interest u/s 36(1)(iii) - AO has disallowed the proportionate interest expenses assuming the interest bearing fund used for making interest free advances in other ways - HELD THAT:- We find no reason to disallow such interest under Section 36(1)(iii) of the Act. Thus, the addition is hereby deleted. Non-adjudication of relating disallowance of delayed payment of employees contribution to Provident Fund u/s 36(1)(va) - HELD THAT:- Admittedly the assessee has made delayed payment in Provident Fund account after the expiry of due date provided under the concern Provident Fund Act. Such expenses, therefore, is not allowable in view of the ratio laid down in the case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] which, according to us was rightly taken into consideration while rejecting the case of the assessee by the Revenue. Hence, we find this ground of appeal has no legs to stand and thus dismissed.
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2020 (9) TMI 619
Estimation of income - bogus purchases - HELD THAT:- For the purposes of making the best judgment assessment, past history of the assessee has been held as reliable and reasonable basis for estimation of profits. In the instant case, though the assessee was incorporated on 15.12.2011, no business was carried out in the said year and the current financial year 2011-12 is the effective first year of operations and the question of applying assessee s past history therefore doesn t arise for consideration as not relevant. Alternatively, comparable cases in the similar line of business should be considered by the authorities. There is nothing on record in respect of any comparable third party data and therefore, we deem it appropriate to set-aside the matter to the file of the AO for the limited purposes of identifying the comparable third party data and the comparison thereof with gross profit of 8.5% so declared by the assessee and then decide, the quantum of addition basis such variation, if any. The assessee is also directed to identify such comparable data and bring it to the notice of the Assessing officer for his examination and verification.
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2020 (9) TMI 618
Addition of interest - assessee has surrendered the amount of advance given - interest earned on these advances is not declared in the return of income - HELD THAT:- AO has considered the whole of the year for which the amount was advanced and the CIT(A) has considered period of two months in case of Kiran Industries and in respect of other hundis, period starting from September till end of the financial year. The amount has been advanced which is not disputed by the assessee and we deem it appropriate to sustain the rate of interest of 12% per annum as applied by the AO which seems reasonable in the facts and circumstances of the present case except in respect of Aditya Minerals, where it should be calculated at the rate of 18% per annum. Further, in respect of transactions with Kiran Industries, Jai Jinendra textiles and MP Enterprises, the interest should be calculated for period of two months as evidence by the documents found during the course of search and in respect of other transactions, it would be reasonable to calculate the rate of interest from month of September till end of the financial year in absence of anything contrary brought on record which shows the date of maturity before the close of financial year. Addition on account of excess stock found during the course of survey - HELD THAT:- As given that the survey was conducted during the middle of the financial year, it is quite likely that there could be some timing mis-match in terms of receipt of physical stock and entries made in the books of accounts and thereafter, once the entries are made in the books of accounts, and necessary reconciliation prepared and submitted, the same should have been examined by the AO and cannot be dismissed summarily. CIT(A) is also of the same view that the said action of the AO is not justified and where the assessee is able to show with evidence that admission made during survey was mistaken, the same should be examined on merits. CIT(A) has thereafter examined the reconciliation statement and has held that the assessee has only partly been able to substantiate the differences and reconciliation so submitted. As gone through the reconciliation statement and find that the assessee has reasonable explained the differences in the stock with its explanation and supporting documentation. In respect of point no. D, we find that valuation of stock has to be at cost price and not selling price and rate of gross profit of 10% has rightly been reduced to arrive at the correct stock valuation and the addition so made is hereby deleted. In respect of point no. E, the ld CIT(A) has granted relief of ₹ 92,082/- and sustained the addition of ₹ 6,705/- which is not pressed by the assessee. In respect of point no. F, the assessee has submitted the relevant purchase bills and affidavit of suppliers stating that the goods were dispatched and delivered to assessee prior to survey and invoices were delivered subsequently and the quantity and other particulars matches and therefore, there is no basis for such addition of ₹ 166,260/- which is hereby deleted. In respect of point no. G, the assessee has explained the reason for recording short opening stock and we find the said explanation satisfactory. In respect of point no. J and K, the assessee has reasonable explained the difference on account of product differentiation and the addition so made is hereby deleted. Ground of appeal is allowed.
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2020 (9) TMI 617
Disallowance of depreciation - capital subsidy received under Technology Upgradation Fund (TUF) scheme - Determination of value as per the Explanation 10 to Section 43(1) - HELD THAT:- Respectfully following the various decisions relied upon by the ld. CIT(A) and the decision of the Hon ble Supreme Court in the case of Ponni Sugars [ 2008 (9) TMI 14 - SUPREME COURT] and in the facts and circumstances of the case, we do not find any infirmity in the order of the ld. CIT(A) deleting the disallowance of depreciation on capital subsidy and accepting the plea of the assessee that the said capital subsidy need to be directly credited only to capital reserve and not to be reduced from the value of plant and machinery as per Explanation-10 to Section 43(1) of the Act. Whether the CIT(A) was justified in treating the interest subsidy received by the assessee under TUF scheme as a capital receipt? - CIT(A) had categorically observed that the object of the TUF subsidy was to increase the competitiveness in the textile industry and not to increase the profits and hence the said interest subsidy deserves to be treated only as a capital receipt. Similarly, we have also observed that the interest subsidy given under the State Government scheme was also meant for promoting the industry in the area which also deserves to be treated only as a capital receipt. Hon ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd., [ 2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] had under similar facts and circumstances held these receipt of subsidies to be capital receipts - Decided against revenue.
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2020 (9) TMI 616
Ad-hoc disallowance - assessee contended that it has maintained all these records and vouchers and that the assessee s books are statutorily audited so no ad-hoc disallowance was warranted - HELD THAT:- Assessee who would be claiming a deduction is expected to have some evidence of such expenditure incurred, as no one is expected to incur expense by any payment to another without there being any proof of it. Having said so, the AO should have item-wise examined the expenditure as claimed by the assessee and in case if he is not convinced by the genuinity of the expenditure as claimed by the assessee, then he can item-wise deny the expenditure. In this case, the AO without rejecting the books of account as required u/s. 145(3) has resorted to estimate the income by ad-hoc disallowance of expenditure claimed by the assessee and according to us if the AO is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) of section 145 has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2) of section 145 then the AO may make an assessment in the manner provided in section 144, which allows the AO to make Best Judgment Assessment. This is not what the AO did. Thus, the AO has not followed the procedure prescribed by the statute and therefore, he violated the principle of Rule of Law and the action of the AO is arbitrary and therefore, the ad-hoc disallowance of 10% made by the AO cannot be allowed. - Decided in favour of assessee.
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2020 (9) TMI 615
Revision u/s 263 - AO has not properly examined and verified carriage and wages expenses - AO had also disallowed 5% of the expenses which was revised in 263 proceedings - HELD THAT:- As decided in KARTICK BOSE [ 2020 (1) TMI 1218 - ITAT KOLKATA] no quarrel assessee s sale purchase figures between the group concern have been accepted per se since the AO proceeded to disallow an estimated 5% inflated amount only. We conclude in this factual backdrop that the PCIT has erred in law and on facts in holding the AO s regular assessment to this effect as an instance of outright bogus than inflated purchases. We according go by following settled legal proposition to hold that PCIT has erred in law and on facts in assuming his sec. 263 revision jurisdiction - Decided in favour of assessee.
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2020 (9) TMI 614
Exemption u/s 10AA - assessee company having business dealing in fuel old and High Speed Diesel, also setting up and operating facilities in connection with planting, storage, delivery and other logistic operations for bunkering business, registered as a Special Economic Zone (in short SEZ ) Unit with Adani Port and Special Economic Zone Ltd. - HELD THAT:- No infirmity in the order passed by the Ld. CIT(A) in allowing the appeal preferred by the assessee by deleting the addition holding it entitled to the claim of deduction /exemption under Section 10AA of the Act and to the tune so as to warrant interference. Hence, in absence of any merit found in the appeal preferred by the Revenue, we dismiss the appeal.
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2020 (9) TMI 613
Deduction on account of penal interest paid to Reserve Bank of India (RBI) - assessee in the present case is a Co-operative bank which is registered u/s 9(1) of Maharashtra Cooperative Societies Act, 1960 - CIT-A deleted the addition - HELD THAT:- Assessee has submitted that the entire liability on account of penal interest charged by RBI for non-maintenance of SLR and CRR was accepted by the assessee bank and the same having been arisen and crystallized during the year under consideration, CIT(A) was fully justified in allowing the claim of the assessee for deduction even on account of provision made on account of penal interest charged by RBI. No infirmity in the impugned order of Ld. CIT(A) allowing the claim of assessee for deduction on account of penal interest paid to RBI for non-maintenance of SLR and CRR including especially the provision made - Decided against revenue.
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2020 (9) TMI 612
Pre-operative expenses disallowance - assessee had not commenced its business activities of manufacturing/production - HELD THAT:- The assets required to commence the business of trading in the form of computer, furniture etc were also acquired by the assessee and it had appointed necessary personnel to carry on its business operations. The premises was also taken on lease by the assessee to carry on its business and although the CIT(A) has raised some objection regarding the size of the said premises being insufficient for setting up of the assessee s business, we find merit in the contention of assessee that the said objection is not sustainable keeping in view the nature of the assessee s business. All these steps taken by the assessee-company during the year under consideration especially the major step taken by procuring the goods from its parent company on 21.02.2011, in our opinion, were sufficient to show that the business was duly set-up and it was ready to commence. As observed that the authorities below, however, could not properly appreciate this position and treated the expenses in question claimed by the assessee as pre-operative expenses on the ground that the business had not commenced in the absence of any sale made by the assessee during the year under consideration. As held in the case of CIT vs. Sarabhai Management Corporation Ltd. [ 1991 (8) TMI 6 - SUPREME COURT] where the business activities constituted of acquisition of property, putting it into shape and lease it out, it could not be said that the business was not setup till the first lease took place. As held that earlier part of the activities, namely, engaging staff, buying the equipment and making the staff familiar therewith are all part of the business and the business can be said to be set-up even earlier. In the case of Western India Vegetable Products Ltd. vs. CIT [ 1954 (3) TMI 59 - BOMBAY HIGH COURT] held that for the purpose of the Indian Income-tax Act, the setting up a business and not the commencement is to be considered. It was held that when a business is established and is ready to commence business, then it can be said that business has been set up. Explaining further, the Hon ble Bombay High Court clarified that there may be an interval between the setting up of the business and the commencement of business and all the expenses incurred during that intervening period would be permissible deduction. We are of the view that the business of the assessee was set-up on 21.02.2011 and it was, therefore, eligible for deduction on account of expenses incurred after that date. We delete the disallowance made by the AO and confirmed by CIT(A) by treating the expenses incurred by the assessee-company under the head personnel cost, general and administrative expenses as pre-operative expenses and allow this appeal of the assessee. - Decided in favour of assessee.
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2020 (9) TMI 611
Deduction u/s 80-IB(10) - project was not completed within 4 years from the date of commencement of the project - HELD THAT:- As held in the case of CIT vs. Tarnetar Corporation [ 2012 (10) TMI 803 - GUJARAT HIGH COURT ] the requirement of formal issue of completion certificate from local authority within the time period is not mandatory in nature and if the project is found to be completed within the time period on evidence, the claim of the assessee for deduction u/s 80IB cannot be denied on this technical ground. Case of Siddhivinayak Kohinoor Venture vs. ACIT [ 2013 (10) TMI 1295 - ITAT PUNE ] for the assessee, this Tribunal allowed the claim of the assessee for deduction u/s 80IB on the basis of the certificate of Architect confirming the construction of building within the stipulated time and the fact that the application for obtaining completion certificate was moved by the assessee before the local authority well within the stipulated period. As observed by the Tribunal that the delay in issuing of completion certificate by the local authority was not attributable to the assessee or to any noncompletion of constriction and, therefore, the claim of the assessee u/s 80IB could not be denied. Claim of the assessee of having completed the project comprising of building A, B and C was duly supported and substantiated by the details and documents furnished by the assessee and since the assessee had substantially complied with the requirement of section 80IB(10), the Assessing Officer was not justified in denying his claim for deduction under the said provisions merely on technical ground that the completion certificate was not issued by the local authority before the due date of completion. In this view of the matter, we uphold the impugned order of the ld. CIT(A) directing the Assessing Officer to allow the claim of the assessee of deduction u/s 80IB(10) in respect of the project comprising of building A, B and C and dismiss this appeal of the Revenue.
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2020 (9) TMI 610
Disallowance u/s 14A r.w.r. 8D (3) - HELD THAT:- Assessee company, with its audited accounts, have come up with specific computation that in order to earn the dividend income of ₹ 6,07,08,212/- they have incurred amount of ₹ 3,46,466/- and suo moto disallowed the same, AO was not empowered to invoke the provisions contained under section 14A read with Rule 8D in a mechanical manner without recording his satisfaction that working given by assessee company is not correct. AO has merely recorded that, I am not satisfied with the correctness of the claim of the assessee . No reasons as to how and why he has not got satisfied with the correctness of the claim of the assessee. So, we are of the considered view that AO as well as ld. CIT (A) have erred in making/confirming further disallowance u/s 14A read with Rule 8D over and above the disallowance made by the assessee, hence disallowance of ₹ 21,23,629/- made by the AO and confirmed by the ld. CIT (A) is hereby ordered to be deleted. Claim of TDS on deferred revenue - AO has not only disallowed the TDS relating to the deferred revenue but also added the TDS so disallowed as income - HELD THAT:- In view of the undisputed factual position explained by the assessee and following the order passed by the coordinate Bench of the Tribunal in the case of HCL Comnet Systems and Services Ltd . [ 2020 (1) TMI 403 - ITAT DELHI ] we are of the considered view that the TDS credit is to be taken irrespective of the year to which it relates even when a related revenue is booked in subsequent financial year, the assessee is entitled to make claim of the entire TDS in the years of deduction. Assessee is entitled for credit for tax deducted at source proportionately across those years in which income is assessable to tax. Consequently, AO is directed to allow credit of TDS on proportionate basis as required under Rule 37BA (3)(ii).
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2020 (9) TMI 609
Disallowance u/s 80IC on account of scrap sales - manufacturing activity of the appellant company - income from sale of scrap are inextricably intrinsically connected with the industrial undertaking and is derived from such industrial undertaking - HELD THAT:- CIT (A) has duly obtained and analyzed unitwise details of scrap sold in the year under assessment and has not noticed any discrepancy therein, the decision rendered by Hon ble Delhi high court in the case of CIT vs. Sadu Forgings Ltd . [2011 (6) TMI 9 - DELHI HIGH COURT] is applicable to the facts and circumstances of the case. Hence, receipt of scrap sales claimed as deduction by the assessee u/s 80IC is part and parcel of business activities and forms part of the business gains, thus required to be included in the gains from business to be eligible for deduction u/s 80IC. So, we are of the considered view that ld. CIT (A) has erred in disallowing the amount of ₹ 7,08,730/- as deduction from scrap sales u/s 80IC. Consequently, the appeal filed by the assessee is hereby allowed and remaining disallowance claimed by the assessee as deduction u/s 80IC is hereby allowed.
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2020 (9) TMI 608
Penalty u/s 271(1)(c) - addition made on account of undisclosed interest income - HELD THAT:- The interest income related to other client ID of ₹ 2,85,26,008/- earned during the year under consideration was never informed by the bank to the assessee and even Form No.16A for the same was apparently not issued. The assessee came to know about the earning of the said interest income only when the same was realized by it in the immediately succeeding year when the concerned Fixed Deposits in bank got matured. Accordingly, the same was declared by the assessee in that year as its income. As remained undisputed by the AO during the course of assessment proceedings as well as penalty proceedings and by the ld. DR at the time of hearing before us, we are of the view that the mistake of the assessee in understating its interest income from bank to the extent was bona-fide one and it gets further fortified by the fact that credit for the tax deducted at source from the said income by the bank was not claimed by the assessee in the return of income filed for the year under consideration. We, therefore, find ourselves in agreement with the CIT(A) that this is not a fit case where assessee can be said to have concealed particulars of its income or furnished inaccurate particulars of such income as contemplated u/s 271(1)(c) and the penalty imposed by the AO under the said provisions of the Act, in our opinion, was rightly cancelled by the ld. CIT(A). We, therefore, uphold the impugned order of the ld. CIT(A) cancelling the penalty u/s 271(1)(c) - Decided against revenue.
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2020 (9) TMI 607
Bogus purchases - AO estimated 10% of the bogus purchase - CIT (A) enhanced the addition by treating the entire bogus purchases as the income of the assessee - HELD THAT:- Onus is on the assessee to establish the genuineness of the suppliers. Though the payment made by the assessee towards the purchases are through banking channels, it is also revealed that the suppliers were issuing bogus bills and vouchers to various parties. In this situation, producing the bills and vouchers and evidencing the payment made through cheque alone will not establish that the transactions are genuine. AO was right in relying on the decision of the Hon ble Apex Court in the case of M/s. Kachwala Gems [ 2006 (12) TMI 83 - SUPREME COURT] estimating the additional income of 10% on the bogus purchases made from the grey market which works out to ₹ 9,30,487/-. Order of the Ld. CIT (A) to enhance the addition by treating the entire bogus purchases as the income of the assessee is not appropriate because it is evident that the assessee had made purchases apparently from his accounted money as the payments have made through banking channels. Further it is also a fact that the Gold/Jewellery purchased are either sold by the assessee or remains with the assessee as his closing stock, since there are no other contrary findings by the Revenue. Set aside the order of the Ld. CIT (A) and confirm the order of the Ld. AO. - Appeal of the assessee is partly allowed.
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Customs
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2020 (9) TMI 606
Validity of SCN - Penalty under Section 114 of the Customs Act - abetting in Smuggling - export of red sanders - prohibited goods - case against appellant is that he procured red sanders and also stores the same in his godown at Delhi - demand based on statements of persons, which were later retracted - HELD THAT:- Learned Authorised Representative points out from para 34.3 of the show cause notice, it is mentioned that this appellant knowingly engaged in negotiation and illegal supply of red sanders for fraudulent exports and actively associated himself in smuggling of red sanders to Shri Lin of China with the help of other members of the syndicate. Thus for the said act of omissions and commissions, is liable to penalty under Section 114 of the Customs Act, 1962. However, in para 35 of the show cause notice wherein the party put to notice are required to finally show cause as to why goods, currency etc. not be confiscated under Section 113 read with Section 121 of the Custom Act for violation of Section 11 of the Customs Act read with Appendix-II of CITES. Thus for the error of not mentioning the proposal to impose penalty again in para 35, does not render imposition of penalty bad, as the show cause notice is required to be read as a whole. Single para cannot be read in isolation for drawing a conclusion. Thus the allegation made in para 34.3 to impose penalty is sufficient. Evidently this appellant was an active member of the smuggling syndicate of red sanders. He further states that in the course of search of residential premises of this appellant, some documents in connection with export were found. This appellant also accepted in the course of statement recorded under Section 108 of his involvement in the smuggling. However, subsequently retracted his statement. Under such circumstances retracted statement is good evidence in view of the corroborative statement of the other persons. Further call detail records indicate that this appellant was in direct contact with the other members of the syndicate. Thus, there is no evidence to show that the goods were allegedly kept with intention to export or were attempted to be exported, no case of confiscation is made out - It was also observed by the Division Bench that so far the seizure of red sanders at Mundra CFS is concerned, there is a separate show cause notice, not concerned with the seizure at Delhi. Division Bench also held that the entire case of Revenue is made out mainly based on the retracted statements, which have held no evidentiary value - It was also held that Revenue could not establish the case of attempt to export of prohibited goods and accordingly, held that the confiscation of red sanders and cash is not sustainable and consequential penalty imposed was also set aside. No case is made out against this appellant also as the confiscation itself have been set aside - no case of abetment is made out against this appellant in the facts and circumstances - the penalty imposed under Section 114 is set aside - Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 605
Imposition of penalty u/s 114(iii) and Section 114AA of the Customs Act - allegation of abetting the fraudulent export of goods - availment of undue export incentives drawback/ DEPB/ focus products scheme, etc. - export of various goods by inflating value - HELD THAT:- The appellant as an employee carried out the instructions and directions of his employer. Further, the appellant had not filed any documents before the Customs Department. Thus, the allegation of attempt to export goods improperly is not established. Accordingly, we set aside the penalty imposed under Section 114(iii) of the Act. Penalty under Section 114AA of Customs Act - HELD THAT:- The allegation of aiding and abetting is not proved. However, it is found that the appellant have knowingly made documents like invoices and packing list for export and had further knowledge that two sets of parallel invoices are prepared one for the purpose of buyer in the foreign country for receiving the export proceeds, and the other invoice having inflated value for receiving the duty drawback benefits. Accordingly, the appellant is liable for penalty under section 114AA - Further, as the appellant have acted only in his capacity as an employee and has not made any extra gain over salary of ₹ 15,000/- p.m., the penalty reduced to ₹ 1,12,500/- (being the amount already paid by way of pre-deposit). Appeal allowed in part.
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2020 (9) TMI 604
Levy of personal penalty for abetment - Quantum of Penalty - Section 114 of the Customs Act - Smuggling - illegal export - red sanders wood logs - HELD THAT:- The appellant Sachin Kumar was a transport agent who arranged the truck for the exporter and appellant No. (2) Venugopal acted as a CHA for clearance of the goods at the NMPT, Mangalore and appellant No. (3) Ravichandra arranged the CHA and the container. Further, the goods were stuffed at the KSDL factory, Bangalore in the presence of Mr. Hashim, Director of the exporter company and Superintendent of Central Excise and thereafter it was sent to Mangalore and from Mangalore it was exported. During the investigation DRI recorded the statement of Mr. Hashim, Director of exporter company and also the appellants. In the statement of Mr. Hashim, he has clearly stated that he was responsible for smuggling of red sander wood logs and the appellants were not knowing about their smuggling plan - further, both the authorities in their orders have admitted that there is no direct proof of the complicity of the appellants and there is suspicion against each of the appellant and on the basis of that suspicion, the appellants have been imposed penalties. It is pertinent to note that the Tribunal in various decisions consistently held that for imposing the personal penalty under Section 114(i) of the Customs Act, 1962, there should be acceptable legal evidence on record about the acts of commission or omission by the appellant. Further in order to hold that the appellant has abetted in the commission of the offence, there has to be a knowledge on the part of the appellant regarding the illegal activities of the exporter whereas in the present case no corroborative evidence has come on record which pinpoint that the appellant had the knowledge of the illegal activities of the exporter company. The impugned order is not sustainable in law - penalty also set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (9) TMI 603
Sanction of Scheme of Merger by Absorption - convening and holding of various meetings - section 230 to 232 of Companies Act - HELD THAT:- It shall be the duty of the Applicant Company concerned to ensure that every creditor of the company is put on notice as regards the Scheme. Objections, if any, will be considered at the time of final hearing for sanction of the Scheme. The Applicant Companies to serve the notice upon (i) the Central Government through the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) the concerned Income Tax Authority within whose jurisdiction each of the Applicant Companies' assessments are made, pursuant to section 230(5) of the Companies Act, 2013 and as per rule 8 of the Companies (Compromises, Arrangements Amalgamations) Rules, 2016. If no response is received by the Tribunal from such authorities within 30 days of the date of receipt of the notice it will be presumed that they have no objection to the proposed Scheme.
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Insolvency & Bankruptcy
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2020 (9) TMI 602
Removal of original Petitioner No.4 from the directorship of 1st Respondent - HELD THAT:- It was decided to convene the said Meeting on 29.6.2020 and the same was duly served upon original petitioner No.4. The intimation for the same was given to original petitioner No.4 vide dated 26th May, 2020 (Page 1799 of appeal). The meeting was ultimately held on 7.7.2020 and the original petitioner No.4 was removed. We observe that proper notice was issued to convene EGM and the same was received by the appellants including the nominee director but they did not make any representation and the EGM voted for removal of nominee director with majority - also, 8 th Respondent is also nominee director of 1st appellant in 1st respondent company. We find no illegality in this process. There are no merits to interfere in the impugned order - appeal dismissed.
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2020 (9) TMI 601
Maintainability of application - initiation of CIRP - Corporate Debtor - Operational creditor - inability to pay debt - existence of default or not - HELD THAT:- It is clear from reading of clauses 4 and 5 of the SDA, the sub distributor purchases products from the distributor according to the price list applicable and terms of sale. The distributor has to bear the cost of price drop for stocks lying with sub distributor and its trade partners as per a mutually accepted process and the payment and credit terms have been specified in Annexure C attached with sub distributor agreement. Thus, it is clear that the transaction for mobile handsets and accessories is between the distributor (M/s. PP Telecell Marketing Pvt. Ltd.) and the Operational Creditor (M/s. Park Network Pvt. Ltd.) and not with any other entity. No where in this agreement there is a obligation placed of the mobile handset manufacturing company M/s. Syntech (HK) Technology Limited. Therefore, M/s. PP Telecell Marketing Pvt. Ltd. is clearly the Corporate Debtor and M/s. Park Network Pvt. Ltd. Is the Operational Creditor. Whether the debt in question is an operational debt? - HELD THAT:- The operational debt means claim in respect of provision of goods and services. In the present case, the goods and services are being provided by the distributor to the sub distributor as per clauses of the sub-distribution agreement. Insofar as the purchase of mobile handsets is concerned, clause 6(c) of the SDA mentions that the sub distributor shall place orders in writing for supply of products. Products bought against such orders will be delivered by the Distributor or lifted by the Sub Distributor within 24 hours of billing and will in no case be stored at distributor s premises beyond this deadline. Therefore, as per clause 4(a) and clause 6(c) of the Sub Distribution Agreement, the Distributor is the seller of mobile handsets and accessories and the Sub Distributor is the purchaser of the products from the Distributor. Clause 4(a) of the Sub Distribution Agreement also makes it clear that Distributor shall bear the cost of price drop for stocks lying with Sub Distributor and its trade partners - However, it is not for us to decide on the quantum of operational debt. Our concern is to see whether this debt is more than the threshold amount specified for admission of application under Section 9 of IBC, 2016. Whether there was a dispute between the Corporate Debtor and Operational Creditor regarding the Operational Debt, which was raised by the Corporate Debtor after receipt of demand notice? - HELD THAT:- Section 8(1) of the IBC 2016 requires the Operational Creditor to deliver a demand notice to Operational Debtor on occurrence of default in the prescribed form and manner, wherein the due date of debt has been shown as 2/5/2019. The reply to demand notice dated 2.5.2019 was sent through Advocate of the Corporate Debtor vide letter dated 21.5.2019. The letter mentions that the demand raised by the Occupational Creditor is totally illegal as the amount demanded is not the liability of the company (M/s. PP Telecell Marketing Pvt. Ltd.), as there was no direct transaction between the parties and the amount claimed by the Operational Creditor. As has been discussed earlier in this judgment, the Sub Distribution Agreement is valid and creates a Corporate Debtor and Operational Creditor relationship between M/s. PP Telecell Marketing Pvt. Ltd. and M/s. Park Network Pvt. Ltd. - the dispute tried to be raised by M/s. PP Telecell Marketing Pvt. through his reply to the demand notice is imaginary and not as defined in Section 8(2)(a) of the IBC 2016. Thus, it is clear that the demand notice was sent on 2/5/2019 by the Operational Creditor to the Corporate Debtor and the dispute raised does not hold any ground. Whether the application under Section 9 of IBC, 2016 was filed by the Operational Creditor within the time period of limitation? - HELD THAT:- It is seen that the application dated 18.7.2019 was filed before the Hon ble NCLT (Adjudicating Authority) and as per para 4 of the application, the date of default has been mentioned as 5/1/2019 and the amount of debt in default is ₹ 20,02,782/-. Therefore the application was filed within limitation. There are no reason to interfere with the impugned order dated 27.5.2020 of Hon ble NCLT, New Delhi (Adjudicating Authority) - appeal dismissed.
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2020 (9) TMI 600
Valuation of assets of the Corporate Debtor - Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The appeal does not raise any question for determination with reference to grounds of appeal qua approval of a Resolution Plan as contemplated under Section 61(3) (i) to (v) of the I B Code. It is not the Appellants case that the Resolution Plan is in conflict with any extant law or that there has been any material irregularity at the hands of Resolution Professional during the conduct of Corporate Insolvency Resolution Process. The record, on the contrary, portrays a very dismal and distressing picture of the Appellants, being in ex-management of the Corporate Debtor, who have been playing truant and holding back while their cooperation was sought by the Resolution Professional in carrying forward the Corporate Insolvency Resolution Process. It is not in controversy that at one stage the Adjudicating Authority had to issue bailable warrants against the Appellants for thwarting the Corporate Insolvency Resolution Process in not extending cooperation to the Resolution Professional who had to file application before the Adjudicating Authority praying for adopting of legally permissible coercive methods to compel obedience by the Appellants. The Adjudicating Authority, on consideration of the application of the Resolution Professional under Section 31(1) of the I B Code, found the Resolution Plan compliant with all statutory and regulatory parameters and providing for all stakeholders besides, not being in conflict with any extant law. Approval of Resolution Plan is a business decision taken by the Committee of Creditors with requisite majority based on their commercial wisdom and the same is non-justiciable. The fair value being ascertained at ₹ 157.12 Crore and the liquidation value being ascertained at ₹ 125.92 Crore, respectively, Respondent No. 2 offered ₹ 143.50 Crore which in the opinion of Committee of Creditors was the best plan providing for satisfaction of claims of all the stakeholders and being viable and feasible, all aspects of the matter having been taken into consideration by the Committee of Creditors based on their commercial wisdom, which is not justiciable either before the Adjudicating Authority or before this Appellate Tribunal. The Code does not provide that the value given by the Resolution Applicant should match the fair value or the liquidation value. The appeal is not maintainable and the Appellants have no case on merit - Appeal dismissed - decided against appellant.
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2020 (9) TMI 599
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor unable to liquidate its financial debt - Financial Debt or not - record of default - information utility or other evidence produced by the financial creditor? - Time Limitation. HELD THAT:- This Adjudicating Authority after hearing both the parties and considering the application and documents annexed there to, observes that the contention challenging the maintainability of the petition that the petition is being filed in UP Electricity commission finds no ground for rejecting the application as the petition filed at UP Electricity Commission is between the Respondent (i.e. SEUPPTCL) and UPPTCL and this application cannot be rejected on this ground. Further with regard to the RBI circular dated 09th June, 2019, this Adjudicating Authority agrees with the contention that it will have a prospective effect and no application in the present proceedings. With regard to the proving of debt, this Adjudicating Authority finds that the corporate debtor has not denied the fact that the debt has been taken from the applicant financial creditor thus it is an admitted debt taken by the corporate debtor as Rupee Term Loan through Facility Agreement from the applicant financial creditor - Further, this Adjudicating Authority finds that as the corporate debtor was under obligation to pay the interest and principal amount in terms of Facility Agreement in 48 equal quarterly instalments and interest at the prescribed rate on a quarterly basis from the date of disbursement under the Facility Agreement and the corporate debtor has failed of fulfil its payment obligation thus default has occurred on part of corporate debtor and the applicant has also attached several documents to prove the existence of debt and default. Thus, this Adjudicating Authority is of the view that there is a default as the corporate debtor has failed repay the amount due to the financial creditor. The petitioner succeeded in establishing that there is a debt and existence of default on behalf of corporate debtor and the application is complete in all respect. Time Limitation - HELD THAT:- The application filed on behalf of financial creditor/Applicant under Section 7 of IBC is found complete. The present petition being filed in 11.04.2019 is well within limitation and the date of default is 13th July, 2018 is much prior to the amendment made in Insolvency and Bankruptcy Code on 05th of June, 2020 whereby Sec 10A was inserted - in the present application the date of default in the present application is 13th July, 2018, thus the amendment made will not be applicable in the present petition. This adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent Company - Moratorium declared.
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2020 (9) TMI 598
Stay on the process of CIRP until outcome of this Application - liquidity of Corporate Debtor to pay the claim - status of CoC on cancellation of claim of R-2 as Financial Creditor - HELD THAT:- Respondent No. 2 is only entitled for 25% of the net profit of the project. That apart, as per MOU, both sides agreed that in case of any dispute, the matter shall be resolved by the arbitration. It is also a matter of record that as per Annexure-E, page No. 59 of the Application i.e. reply of public notice given for title clearance, wherein, Mr. Mukeshbhai Nanubhai Desai has been shown as having ownership of 25% share in the Coconut project and to that effect MOU has been executed. Further, on perusal of the record, it is found that the RP has declared Respondent No. 2 as a sole Financial Creditor as reflected from Minutes of Meeting dated 14.11.2019, to which the Applicant/Suspended Management raised an objection, as reflected from page No. 22 of the rejoinder to reply filed by the Respondent No. 1 and thereafter the instant application is filed on 19.11.2019. Time Limitation - HELD THAT:- On perusal of the record, it is amply clear that amount so paid by the Respondent No. 2 has no time value of money by way of interest or repayable along with interest, as is also admitted by the Respondent No. 2 himself that the same is paid towards development and construction of the project and he has to get 25% from the net profit, as reflected in MOU and its various covenants/terms and conditions. Further, even if it is assumed that amount is paid as a loan, but admittedly it was paid in 2014 and as such is barred by limitation. The status of the Respondent No. 2 (Mr. Mukesh Desai) cannot be taken as Financial Creditor. Hence, the COC so constituted by the RP is void ab initio. Further, the Operational Creditor have liberty to file his application through RP and RP shall make all endeavour to file Form F.A., so filed by the Operational Creditor for withdrawal of the CIRP before this Adjudicating Authority - Application allowed.
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2020 (9) TMI 597
Restoration of company petition seeking initiation of CIRP - In view of another petition, the fist petitioner was asked to approach IRP for further action - effect of Withdrawal of another Company Petition - allegation of default in payment of a Financial Debt - Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT:- This Authority by order dated 12.02.2020 admitted the other Company Petition against the same Respondent/Corporate Debtor. The order dated 13.02.2019 was made suo motu after the order of admission was passed. The said order of admission was set at naught by withdrawal of the Company Petition under Section 12A of the Code. Therefore, necessary corollary would have been that the order dated 13.02.2020 passed in this case was accordingly suo motu recalled, its basis having become non-existent. The Applicant however filed an application for recall of the order dated 13.02.2020 to restore the Company Petition for hearing it on merits. Now the Application having been not pressed, what could be the fate of the Company Petition! Whether the same should be left unattended in view of the order dated 13.02.2020 or should the Authority take some action for redressal of the Company Petitioner on merits. As already indicated the Company Petitioner cannot be left in the lurch for none of its dereliction. An Application for restoration of the Company Petition is sought as a matter of prudence and practice, so that disposal of Company Petition, as in the present case, is not ignored and the Petitioner is left without a remedy. Taking into consideration the principle of law discussed, the Company Petition needs to be restored to file and relegated to date of hearing i.e. 11.02.2020 for further action in the matter. While ordering so it would not be out of place to mention that the allegation of forgery and perjury raised in IA Nos. 51 and 52 of 2020 shall not be affected by the orders passed herein.
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2020 (9) TMI 591
Approval of Resolution Plan - the plan was approved by CoC - Section 31 (1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The COC approved the Resolution Plan submitted by M/S. NCJ Infrastructure Private Limited in which the total amount offered was revised and recorded their reasons for approval as required under Regulation 39 (3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It is specifically noted that the Resolution Applicant will infuse capital of ₹ 1, 00, 00,000/- in the Company by way of equity/equity linked instruments. Further depending on the requirements of the Company, the Resolution Applicant proposes to infuse the additional funds up to ₹ 9,00,00,000/by way of equity/ equity linked instruments or loan which will be utilised for day to day operations of the company and to meet the capex requirements to revive the operations of the company as and when required by the company in the ordinary course of business - The Resolution Applicant has filed the Affidavit stating that at the time of submission of Resolution Plan and thereafter an additional affidavit has been filed which states that neither the Resolution Applicant nor any other person acting jointly or in concert with the Resolution Applicant, nor any connected person as provided under Section 29-A of the IBC, 2016. The accounts of the Resolution Applicant and any connected person, or an account of the Corporate Debtor under the management or control of such person, of whom, such person is a Promoter, is not classified as nonperforming asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulations Act, 1949 or guidelines of a Financial Sector Regulator issued under any other law for the time being in enforce and at least a period of one year or more has lapsed from the date of such classification till the date of commencement of Corporate Insolvency Resolution Process of the Corporate Debtor and the applicant have not failed to make the payment of all overdue amounts with interest therein and charges related to non-performing assets before submission of the Resolution Plan. The parameters for approval of Resolution Plan are set out in Section 30 and 31 of the IBC, 2016. The Resolution Plan has to fulfil certain mandatory requirements under the Code and CIRP Regulations and the Resolution plan has complied with such mandatory compliance - the Resolution Plan annexed with the CA-441/CIll/ND/2019 filed in CP 1B No. 22/ND/2018 is hereby approved which shall be binding on the Corporate Debtor and its employees, members, promoters, creditors, guarantors and other stakeholders involved in the Resolution Plan including the Resolution Applicant. The Resolution Applicant shall pursuant to the Resolution Plan approved under Section 31(1) of the I B Code, 2016, obtain all the necessary approval as may be required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan by this authority or within such period as provided for in such law - The order of moratorium passed by this Adjudicating Authority under Section 14 of the IBC, 2016 shall cease to have effect from the date of passing of this Order.
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Service Tax
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2020 (9) TMI 596
Principles of Natural Justice - petitioner took the stand that certain documents are to be provided by the respondents so that they could submit a consolidated reply to the show cause notice - first respondent however decided that the petitioner is not entitled to the said copy of the report and fixed the personal hearing on 29.07.2019 - HELD THAT:- The adjudication process cannot be stalled. But then, in the case on hand, the petitioner's demand is for the supply of a copy of the Scrutiny report prepared by the third respondent. It is admitted in the counter affidavit itself that verification exercise was undertaken - the contention of the learned Standing Counsel cannot be agreed with, that the verification exercise undertaken by the third respondent is an integral part of the adjudication process. It cannot be. The first respondent is an independent adjudicating authority. He cannot delegate his adjudicating power to any one. It is true that the decision of the Honourable Division Bench appears to in favour of the Department. But then, in that case, demand for supply of relied-on documents was made at the show cause notice stage itself. The case on hand is having a different flavour. The Scrutiny report was prepared after the submission of interim reply to the show cause notice. If the report in question is not furnished to the petitioner and if an adverse order based on the said report is passed, then the adjudication would be set aside on that sole ground. Therefore, by furnishing a copy of the report, the department is not going to suffer any prejudice, on the other hand, it will avoid multiplicity of proceedings. The first respondent is directed to make available the Scrutiny report submitted by the third respondent to the petitioner herein - Petition allowed.
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Indian Laws
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2020 (9) TMI 595
Appointment of sole arbitrator - Section 11(6) read with Seciton 11(12)(a) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The parties having entered into a business transaction; certain disputes have arisen between them which is to be resolved through arbitration. To that extent the parties are also in agreement. The issue for consideration however, is with regard to the appropriate clause that will operate providing for arbitration and will be applicable in the factual matrix herein. Since the applicant is before this Court invoking the arbitration clause in the purchase order (37 separate purchase orders), it is necessary to take note of the arbitration clause relied upon. Since the transaction entered into between the parties and the dispute having arisen not being in dispute; further the above extracted arbitration clause being explicit; in a normal circumstance no other consideration would have been necessary in the limited scope for consideration in an application under Section 11 of the Act, 1996. However, in the case on hand the fact remains that undisputedly an Agreement dated 31.03.2018 is also entered into between the parties relating to the very same transaction which is referred to as the Umbrella Agreement by the respondent and as Pricing Agreement by the applicant. The said agreement also makes provision for resolution of disputes through arbitration in the manner as indicated therein. When both, the purchase order as also the Pricing Agreement subsists and both the said documents contain the arbitration clauses which are not similar to one another, in order to determine the nature of the arbitral proceedings the said two documents will have to be read in harmony or reconciled so as to take note of the nature of the dispute that had arisen between the parties which would require resolution through arbitration and thereafter arrive at the conclusion as to whether the instant application filed under Section 11 of the Act, 1996 would be sustainable so as to appoint an arbitrator by invoking Clause7 of the purchase order; more particularly in a situation where the Arbitral Tribunal has already been constituted in terms of Clause23 of the agreement dated 31.03.2018. When admittedly the parties had entered into the agreement dated 31.03.2018 and there was consensus adidem to the terms and conditions contained therein which is comprehensive and encompassing all terms of the transaction and such agreement also contains an arbitration clause which is different from the arbitration clause provided in the purchase order which is for the limited purpose of supply of the produce with more specific details which arises out of Agreement dated 31.03.2018; the arbitration clause contained in Clause23 in the main agreement dated 31.03.2018 would govern the parties insofar as the present nature of dispute that has been raised by them with regard to the price and the terms of payment including recovery etc. In that view, it would not be appropriate for the applicant to invoke Clause7 of the purchase orders more particularly when the arbitration clause contained in the Agreement dated 31.03.2018 has been invoked and the Arbitral Tribunal comprising of Mr. Jonathan Jacob Gass, Mr. Gourab Banerji and Ms. Lucy Greenwood has already been appointed on 22.06.2020. he petitioner claiming to be aggrieved by the constitution of the Arbitral Tribunal has filed the suit seeking a decree of declaration that the arbitration clause23 of the Pricing Agreement dated 31.03.2018 is null and void and in that context has sought for the ancillary relief in the suit. In the said suit the petitioner has moved the Notice of Motion seeking for an interlocutory order of injunction against the Arbitral Tribunal constituted by the ICC. The learned Single Judge through a detailed judgment dated 12.08.2020 has rejected the prayer for interim order and the Notice of Motion has been dismissed. The petitioner claiming to be aggrieved by the said order had preferred an appeal to the Division Bench, which on consideration has declined grant of interim order though the appeal has been admitted for consideration. Application dismissed.
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2020 (9) TMI 594
Dishonor of Cheque - vicarious liability of Director of being accused - no specific allegation as against the petitioner to attract the offences under Section 141 of NI Act - issuance of summons without application of mind - principles of natural justice - HELD THAT:- The Hon ble Supreme Court of India in various cases repeatedly held that the complaint has to specifically say as to how and in what manner Director was responsible for the conduct of the business of the company. Unfortunately in the impugned complaint, the allegations did not satisfy the requirements of Section 141 of NI Act. That apart, the petitioner is being implicated as third accused who is inducted as Non Executive Director of the first accused company, therefore the petitioner is not being made responsible for the day to day affairs of the company and she cannot be held liable vicariously for the offence committed by the company. Therefore, in order to secure ends of justice and to prevent the abuse of process of court, this Court has to necessarily interfere with the proceedings in exercise of its jurisdiction under Section 482 of Cr.P.C. These Criminal Original Petitions are allowed.
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2020 (9) TMI 593
Criminal revision petition - Dishonor of Cheque - petitioner /accused preferred this Criminal Revision Case on the grounds that the trial Court and the appellate Court have not appreciated the evidence properly - offence under Section 138 of the Negotiable Instruments Act - HELD THAT:- The scope of Criminal Revision under Section 397 r/w 401 CrPC is very limited and this Court cannot re-appreciate the evidence, unless and until there is a illegality, perversity or impropriety in the findings of the trial Court and the appellate Court. Admittedly, this petitioner / accused was having certain business transactions with the first respondent/complainant. Taking advantage of the same, on 25.03.2012, the petitioner received a sum of ₹ 4 lakhs from the respondent/complainant, by issuing a cheque that he can collect the said amount by depositing the cheque on the next day i.e.,on 26.03.2012.Accordingly, the respondent/ complainant has also deposited the cheque on 26.03.2012, but it was returned for insufficient funds. Immediately, the complainant also issued a legal notice on 04.04.2012 to the petitioner and it was also acknowledged by him on 09.04.2012, but this petitioner/accused neither sent any reply to the notice within the statutory period nor paid the money. However, he sent a reply only on 08.06.2012 with certain allegations, even then, he did not make any attempt to substantiate the same before the trial Court. The respondent /complainant has also produced his Bank Account Statement as Ex.P6 to show that as on the date of borrowal, he was having ₹ 14,29,506.16/- in his account, by which, he has established that he has sufficient sources of money and admittedly he is also a business man, having business establishment on selling some construction materials. Therefore, it cannot be stated that the petitioner would not have sufficient money of ₹ 4 lakhs on a Sunday in his house. In this case, the petitioner has not denied that the cheque ExP1 and the signature found therein are not that of him. The courts below, considering the available evidence, has also rightly rejected the case of the petitioner and found him guilty and convicted. The reasons assigned by the petitioner in support of the petition are not sustainable. Criminal Revision Case is dismissed.
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2020 (9) TMI 592
Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally valid debt or not - offence committed under Section 138 of Negotiable Instruments Act - HELD THAT:- The petitioner who is the complainant before the trial Court apart from having produced the dishonored cheque (Ex. P1), petitioner bankers memo of dishonor (Ex. P2), respondents-bankers memo of dishonor Ex. P3, legal notice Ex. P4, reply notice Exs. P5 to P8, rejoinder notice Ex. P9 and the complaint in PCR No. 124/2005 (Ex. P10), has not produced any other documents to establish that there is any debt due and liable to be paid. In that Ex. P1 being cheque and Ex. P4 being a demand notice are contended to be sufficient by the petitioner to establish the debt due and liable to be paid by the respondents. The only witness examined being CW. 1 on the part of the petitioner though has stated initially that he is in possession of the invoices and agreement had chosen not to produce those documents and subsequently during further cross-examination has also denied that any invoices were in existence. It is not possible for any transaction of liquor to be done in the absence of invoices more so since liquor is an excisable commodity, under the Central Excise Act, any item of liquor sold would have to be accompanied by invoices, the fact that despite the petitioner having been put on notice as regards production of the invoices even duplicate/Xerox, the petitioner has chosen not to produce them would establish that there is no transaction in respect of this particular amount relatable to liquor as contended by the petitioner - Thus, it cannot be contended that the cheque has been issued in discharge of a legally valid debt by the respondents to the petitioner. There is no legal infirmity in the order passed by the First Appellate Court requiring any interference by this Court - Appeal dismissed - decided against appellant.
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