TMI Tax Updates - e-Newsletter
September 4, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. GST ON 2/3 WHEELED ELECTRIC VEHICLES

   By: Dr. Sanjiv Agarwal

News

1. Finance Minister Smt. Nirmala Sitharaman chairs 24th meeting of Financial Stability and Development Council

2. INDIA’S MERCHANDISE TRADE: Preliminary Data August 2021

3. In a major boost to agricultural products exports, First consignment of Ladakh Apricot exported to Dubai

4. Finance Minister Smt. Nirmala Sitharaman leads Indian delegation in 11th UK-India Economic and Financial Dialogue

Notifications

Customs

1. 71/2021 - dated 2-9-2021 - Cus (NT)

Supersession Notification No.68/2021-Customs(N.T.), dated 19th August, 2021

DGFT

2. 22/2015-2020 - dated 2-9-2021 - FTP

Incorporation of Explanation in Notification No.36/2015-2020 dated 18th December, 2019

GST - States

3. FTX.56/2017/Pt-II/659 - dated 10-8-2021 - Assam SGST

Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021 in exercise of powers under section 168A of Assam GST Act.

4. 05/2021-State Tax (Rate) - dated 3-8-2021 - Tripura SGST

Seeks to provide the concessional rate of TGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021

5. 04/2021-State Tax (Rate) - dated 3-8-2021 - Tripura SGST

Amendment in Notification No. 11/2017-State Tax (Rate). dated the 29th June 2017

6. F.1-11 (91)-Tax/GST/2021(PART) - dated 19-7-2021 - Tripura SGST

Seeks to exclude government departments and local authorities from the requirement of issuance of e-invoice

7. F.1-11 (91)-Tax/GST/2021(PART) - dated 19-7-2021 - Tripura SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7

8. 03/2021-State Tax (Rate) - dated 19-7-2021 - Tripura SGST

Amendment in Notification No. 06/2019- Slate Tax (Rate), dated the 30th March- 2019

9. 02/2021-State Tax (Rate) - dated 19-7-2021 - Tripura SGST

Amendment in Notification No. 11/2017- Statel Tax (Rate), dated the 29th June, 2017

10. 01/2021-State Tax (Rate) - dated 19-7-2021 - Tripura SGST

Amendment in Notification No. 1/2017- Statel Tax (Rate), dated the 29th June, 2017

Income Tax

11. 99/2021 - dated 2-9-2021 - IT

Income-tax (26th Amendment) Rules, 2021. - TDS - Furnishing of declaration and evidence of claims by specified senior citizen u/s 194P

12. 98/2021 - dated 2-9-2021 - IT

Central Government notifies specified Bank to mean a banking company which is a scheduled bank and has been appointed as agents of Reserve Bank of India

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/624 - dated 2-9-2021

Alignment of interest of Asset Management Companies (‘AMCs’) with the Unitholders of the Mutual Fund Schemes

2. SEBI/HO/MRD1/ICC1/CIR/P/2021/625 - dated 2-9-2021

Amendment to SEBI Circular SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017 on Amendment pursuant to comprehensive review of Investor Grievance Redressal Mechanism

Highlights / Catch Notes

GST

• Court Quashes AAR and AAAR Orders; Remands Case to Reassess Educational Institution Status for GST Liability.

  Case-Laws - HC : Liability to pay tax / GST - Validity of Rulings of AAR and AAAR - educational institution or not - The contention of the petitioner, as seen from both the orders challenged here, has neither been considered nor has it been answered specifically by these authorities. - The authorities ought to have considered this contention independently of the activity of MGIMS and in the light of the manner in which the aims and objects of the society is fulfilled by the petitioner-society. - Orders quashed and matter restored before AAR - HC
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• Ex-parte Order u/s 74 Invalid: Lack of Adequate Notice and Reasoning Violates Natural Justice Principles.

  Case-Laws - HC : Validity of Ex-parte order passed u/s 74 - No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. - HC
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• Court Denies Bail for Accused in GST Credit Fraud Case Amid Concerns of Investigation Interference and Absconding Accomplices.

  Case-Laws - DSC : Seeking grant of Bail - availment of irregular credit -The allegations against the accused are serious and investigation is still underway. If accused is released at this juncture, he would definitely interdict with the fair investigation given the fact that the absconding accused persons may be protected by him. - Application rejected - DSC
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• Bail Denied in GST Evasion Case: Severity of Offences and Investigation Stage Cited; Risk of Interference Noted.

  Case-Laws - DSC : Seeking grant of Regular Bail - GST Evasion - taking note of the nature of accusations and severity of the offences alleged ( economic offences ), and that investigation is still at nascent stage ; number of accused persons are absconding and evading the process of law ; the entire incriminating material is yet to be recovered, the Managing Director of the company is absconding and there is strong possibility of the applicant interfering in the investigation and/or influencing the witnesses of the case, if enlarged on bail, at this stage of the case, hence, no grounds for grant of bail is made out. - DSC
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Income Tax

• Revenue Authorities' Salary Comparison u/s 11 Deemed Unreasonable; Trustees' Roles Differ from Employees' Duties.

  Case-Laws - AT : Exemption u/s.11 - salary paid to the trustees - undue benefit - Basis adopted by the Revenue authorities for quantifying the undue benefit given to the aforesaid trustees, by comparing with the salary paid to employees of the trust i.e. the members and other working staff, is unreasonable. The quality of work rendered by the management of the trust on one hand, which includes the two trustees, and that by the employees of the trust, who are involved only in execution of the decisions taken by the management and other day-to-day activities, is totally different and there can be no comparison between the two. - AT
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• Court Denies Import Duty Adjustment in Transfer Pricing Case Due to Existing Duty Structure and Sale Price Considerations.

  Case-Laws - AT : TP Adjustment - non granting of adjustment on import duty - as necessary consumption of the material is only booked in the profit and loss account for which the materials are imported for onward sale/manufacturing whose revenue has been booked in the profit and loss account, the above adjustment cannot be granted. This is so for the reason that the duty structure of the material imported by the assessee and the sale price of the assessee takes into consideration all these commercial aspects of the trading or operation of the business of the assessee. - AT
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• Deduction Denied: Cold Storage Business Ineligible for Section 80IB(11A) Due to Lack of Required Activities.

  Case-Laws - AT : Disallowance of deduction u/s 80IB(11A) - On perusal of tax audit report, the nature of the business activity of the assessee has been shown as cold storage services and in financial statements also as well as as per the orders of lower authorities, Form 10CCB also does not reflect that the assessee is carrying or engaged in the business of handling, storage and transportation of food grains and also not taking of any business of processing and packaging of goods or vegetables vide sl. Nos. 24(b) and 24(c) respectively. No doubt, the assessee is operating cold storage, but, other ingredients for eligibility of deduction is not satisfied. - AT
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• Sales Tax Refund Subsidy from State Government Classified as Revenue Receipt, Influencing Income Tax Accounting.

  Case-Laws - AT : Nature of receipt - revenue or capital receipt - sales tax paid is received as a grant from the State Govt - As the subsidy received by the assessee in the form of refund of sales tax paid from the Sate Govt of AP is to be treated as revenue receipts. - AT
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• CIT's Section 263 Revision Challenged: Deduction Claim u/s 80IB(10) Valid with Necessary Certificates Obtained.

  Case-Laws - AT : Revision u/s 263 by CIT - Allowability of claim of deduction u/s. 80IB(10) - In case Revenue authorities are not satisfied with the contents of the completion certificate issued by Bhopal Municipal Corporation, they have option to file a writ before the Hon'ble Jurisdictional High Court but certainly they cannot deny the claim of deduction u/s. 80IB(10) of the Act which the assessee has claimed after obtaining all necessary certificate as well as the certificate from the Chartered Accountant and having fulfilled all the requirements of the provisions of section 80IB(10). - AT
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• Assessee Denied Deduction u/s 54 for Not Depositing Capital Gains; Tax Imposed on Asset Sale Proceeds.

  Case-Laws - AT : Deduction u/s 54 - Proportionate deduction - Denial of deduction as capital gains arising out of sale of original asset was not deposited in the Capital Gain Deposit Account - If the assessee failed to do so, he is liable for capital gain on the transfer of capital asset. - the assessee is entitled for deduction only to the extent of amount used for purchase of residential site only - AT
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• High Court Upholds ITSC Order u/s 245D(4), Citing No Procedural Errors in Decision-Making Process.

  Case-Laws - HC : Validity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - proof of procedural error committed by the ITSC or any error with regard to the decision making process - full and true disclosure - learned Single Judge has set aside the order of ITSC - If a very rigid approach is taken in this regard, then the very purpose of enacting Sub-Section (6) of Section 245D of the Act would lose its purpose. In any event, we find that there is no error in the decision making process and as pointed out, we are not expected to substitute the decision of the ITSC, which has taken note of the conduct of the assessee, who was in the spirit of settlement subject to conditions - we are of the view that the order passed in the said writ petition calls for interference. - HC
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• Court Rules Escrow Funds Included in Sale Consideration for Capital Gains; Entire Amount Accrues in Assessment Year.

  Case-Laws - HC : Computation of Capital Gains - Accrual of receipt - Inclusion of amount (as part of sale consideration) retained in the Escrow Account for meeting liabilities and obligation - undoubtedly, the entire sale consideration had accrued in favour of the assessee during the assessment year under consideration. Even assuming that certain payments have been made from the amount retained in the Escrow account, it will not make or in any manner reduce the cost of acquisition - Additions confirmed - HC
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• Court Questions Overturning of ITSC Order u/s 245D(4); Lack of Identified Procedural Errors Highlighted.

  Case-Laws - HC : Validity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - Learned Single Judge ought not to have set aside the common order passed by the ITSC and remanded the matter to the Assessing Officer to follow the consequential assessment procedure without recording any finding as to whether there was any procedural error committed by the ITSC or any error with regard to the decision making process - HC
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• Tax Assessment Reopening: Impact of Section 148 Amendments and Extensions Due to COVID-19 Challenges.

  Case-Laws - HC : Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 would also be saved. - HC
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Customs

• Court Rules 2012 Exemption Notification Applies Prospectively; Vessels Imported Before 2012 Not Subject to Duty Conditions.

  Case-Laws - HC : Import of the vessel ‘Jag Arnav’, retrospectively amenable to customs duty or not - Levy of duty w.e.f. Retrospective effect - This Court concludes that in the present case exemption notification dated 17th March, 2012 is only prospective in its application and that in respect of the import of the three vessels i.e. ‘Jag Arnav’, ‘Jag Ratan’ and ‘Jag Rani’ which were imported into India first on 30th April 2003, 13th November, 2007 and 26th August, 2011 respectively, Entry 462 read with Condition No.82 of the notification dated 17th March, 2012 will not apply - HC
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• Dispute Over Goods Classification: Each Consignment Must Be Evaluated Independently Without Affecting Past Classifications.

  Case-Laws - AT : Mis-classification and misdeclaration of imported goods - The test of one particular consignment cannot be used to override the test conducted in respect of past consignments for deciding theclassification in respect of previous consignment test report of the same was not under dispute. - AT
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• Misclassification of Imported Goods as Slaked Lime, Revenue's Classification Rejected, Goods Found to Be Ash-Type Powder.

  Case-Laws - AT : Mis-classification and misdeclaration of imported goods - goods declared as Lime Mortar(Slaked lime) but goods were found to be in form of ash type powder - The quick lime when reacts with water it forms slaked lime and the slaked lime is calcium hydroxide. Accordingly, it is clear that the goods in question is slaked lime under chapter heading 2522. - In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - AT
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Indian Laws

• Dishonored Cheque Validly Notified by Vijaya Bank Memo; No Need for Additional Memo from Complainant's Bank.

  Case-Laws - HC : Dishonor of Cheque - The accused account is at Vijaya Bank and the accused Bank has given endorsement of memo directly to the Manager of the complainant's Bank i.e., Karur Vysya Bank for dishonor of cheque due to insufficient funds. Therefore, the Karur Vysya Bank has given the said endorsement to the complainant for having dishonored the cheque. Therefore, there is no need for the complainant Bank to issue one more memo for dishonor of the cheque presented by the complainant. The Bank memo or letter issued by the Vijaya Bank of the accused is sufficient to show that the cheque has been dishonored for the reason 'insufficient funds'. - HC
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• Cheque Dishonor Complaints Valid Despite Formal Error in Cheque Number; Discrepancy Deemed Insignificant by Magistrate.

  Case-Laws - HC : Dishonor of cheque - If a notice is given on the basis of incorrect cheque number, then the entire foundation will fall and the complainant cannot maintain his complaint on the basis of incorrect cheque number. However, in the present case, it is not the case of the applicant that the statutory notice was issued to him by mentioning incorrect cheque number. The Magistrate in its order has also mentioned that the cheque number mentioned in the cheque, written memo and statutory notice is 628895, whereas only in the complaint the cheque number has been mentioned as 628892, therefore, it is a formal infirmity. - HC
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Central Excise

• Adjudication Should Pause Until SVLDRS Proceedings Conclude to Preserve Scheme's Purpose, Court Rules.

  Case-Laws - HC : SVLDRS - simultaneou adjudication of SCN proceedings - In absence of any statutory risk to the adjudication proceedings being hit by any rule of limitation, those proceedings should necessarily have been kept in abeyance till the conclusion of the proceedings under the Scheme. We cannot contemplate, what useful purpose could be served by continuing and concluding the adjudication proceeding during the pendency of the proceedings arising upon filing of the (first) declaration on SVLDRS-1, under the Scheme, on 30.10.2019. In fact, by their conduct the authorities under the Act could not have defeated the object of an otherwise valid proceedings under the Scheme. - HC
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• Tribunal Overturns Ruling: Interest on Receivables and Collection Charges Deduction Disallowed, Contradicting Previous Final Decision.

  Case-Laws - AT : Valuation - disallowance of deduction from assessable value - deduction on interest on receivables and collection charges on the delay in payment for each invoice - In the remand proceedings, the Assistant Commissioner and the Commissioner (Appeals) were not required to examine whether the amount on ‘interest on receivables’ and ‘bank charges’ is inbuilt in the price, but yet they not only proceeded to examine it but recorded a finding against the appellant. - Further, when the earlier decision of tribunal on the same issue has attained finally, the contrary order cannot sustained - AT
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Case Laws:

• GST

• 2021 (9) TMI 158
  Liability to pay tax / GST - Validity of Rulings of AAR and AAAR - educational institution or not - applicant is a Charitable Society having the main object and factually engaged in imparting Medical Education - Requirement of registration under the Central Goods and Service Tax Act, 2017 - contention of the petitioner-society is that it has been established primarily for the purpose of imparting of education and that it does so, through its Special Purpose Vehicle viz. MGIMS - HELD THAT:- To the extent the petitioner-society imparts education through its Special Purpose Vehicle-MGIMS, the society would also be eligible to be termed as educational institution and therefore, entitled for seeking exemption from the requirement of registration and GST liability, is the submission of the society. This contention of the petitioner, as seen from both the orders challenged here, has neither been considered nor has it been answered specifically by these authorities. The authorities ought to have considered this contention independently of the activity of MGIMS and in the light of the manner in which the aims and objects of the society is fulfilled by the petitioner-society. - Such exercise having not been done by the authorities below and no findings on these lines having been rendered by both the Authorities, both the orders, as rightly submitted by the learned counsel for the petitioners, are erroneous and cannot stand to the scrutiny of law. Petition allowed - decided in favor of petitioner.

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• 2021 (9) TMI 155
  Validity of Ex-parte order passed u/s 74 - Violation of principles of natural justice - fair opportunity of hearing not provided - ex-parte order - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie , it is opined that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Order set aside - Matter remanded back - Petition disposed off.

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• 2021 (9) TMI 153
  Validity of Ex-parte order passed u/s 74 - Principles of natural justice - fair opportunity and time of hearing not provided - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Order set aside - Matter restored back with directions - Petition disposed off.

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• 2021 (9) TMI 111
  Seeking grant of Bail - availment of irregular credit - credit availed on the strength of the invoices of non exisiting firms - HELD THAT:- The grant of bail depends upon complex of facts and factors considered in the light of golden principles laid down from time to time by the higher Courts in DIPAK SHUBHASH CHANDRA MEHTA VERSUS CBI. [ 2013 (6) TMI 105 - SUPREME COURT] where it was held that The Court granting bail should exercise its discretion in a judicious manner and not as a matter of course. Though at the stage of granting bail, a detailed examination of evidence and elaborate documentation of the merits of the case need not be undertaken, there is a need to indicate in such orders reasons for prima facie concluding why bail was being granted, particularly, where the accused is charged of having committed a serious offence. In the given facts, accused is in jail since 23.07.2021. The bail application of the co-accused has been dismissed by Ld ASJ on 31.08.2021. The other co-accused persons are still absconding. The role of the accused is at the same footing with the other accused persons whose application is dismissed by Ld ASJ. The allegations against the accused are serious and investigation is still underway. If accused is released at this juncture, he would definitely interdict with the fair investigation given the fact that the absconding accused persons may be protected by him. Application dismissed.

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• 2021 (9) TMI 110
  Seeking grant of Regular Bail - concealment of facts - procurement of bogus bills from the non existent companies - availment of irregular credit - HELD THAT:- It is stated that there is no hard and fast rule nor any precedent that completion of 30 days in judicial custody entitles the applicant/accused to be released on bail, as was argued by learned senior counsel. The material placed on record by the prosecution, which has surfaced on record during investigation conducted so far, the factum of existent of such firms is seriously under cloud. As was rightly highlighted by the learned Senior Standing Counsel, the said firms appears to exist only on papers and the entire so called business transactions seems to have been manipulated by the applicant himself. Prima facie complicity of the applicant/accused in the present case is evident from the records of the case - it is evident from the record that one of the main accused/Managing Director of applicant s ( M/s Urja ) is absconding, is evading the process of law which is hampering the further investigation of the case ; and if the applicant is enlarged on bail at this stage there is strong possibility of him influencing the prosecution witnesses and / or hampering the investigation of the case. Thus, taking note of the nature of accusations and severity of the offences alleged ( economic offences ), and that investigation is still at nascent stage ; number of accused persons are absconding and evading the process of law ; the entire incriminating material is yet to be recovered, the Managing Director of the company is absconding and there is strong possibility of the applicant interfering in the investigation and/or influencing the witnesses of the case, if enlarged on bail, at this stage of the case, hence, no grounds for grant of bail is made out. The bail application under section 439 Cr.P.C of applicant/accused Yogesh Kumar Goyal stands disposed off as dismissed.

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• 2021 (9) TMI 109
  Condonation of delay in filing appeal - delay on the ground that accountant of the assessee who looks after the matters of appellant was not well - rejection of application for cancellation of registration - whether the appeal has been filed within the prescribed time- limit? - HELD THAT:- In the instant case the appeal has been filed by delay from the normal period prescribed under Section 107(1) of the CGST Act, 2017. Though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017 - the delay in filing of appeal is condoned. Whether or not the appeal filed against the order of cancellation to be decided? - HELD THAT:- The adjudicating authority/proper officer has rejected the application for cancellation of registration through Form GST REG-19 dated 06.22.2020 as the appellant did not file the GST returns and also not deposited Govt liabilities/dues etc. - the appellant has filed all his pending returns upto date of cancellation of registration and he has also deposited tax liabilities, late fee and interest, therefore the appellant has now been complied with the relevant provisions in the instant case - thus, the registration of appellant may be considered for revocation by the proper officer. Appeal allowed - decided in favor of appellant.

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• Income Tax

• 2021 (9) TMI 166
  Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021- identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved.

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• 2021 (9) TMI 165
  Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved.

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• 2021 (9) TMI 164
  Validity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - proof of procedural error committed by the ITSC or any error with regard to the decision making process - full and true disclosure - Whether assessees having satisfied the requisite conditions provided under Section 245H and having cooperated with the proceedings before the ITSC and made full and true disclosure of their income, they were granted immunity from penalty and prosecution under the Act? - whether the filing of applications by the assessees for settling the cases is a genuine attempt of the assessees wherein the assessees fully and truly disclosed all material particulars bearing in mind that it is they who approached the ITSC to settle the dispute? - HELD THAT:- The proper method of reading the common order passed by the ITSC is to read the order in its entirety - proper books of accounts were not maintained in all the three cases and the assessees do not, at any point of time, state that they have maintained books of accounts. This is precisely the reason for which the matter has gone before the ITSC and the assessees made full and true disclosure and also offered additional income to tax and regarding valuation of the properties, etc., additions have been made. So far as the method of valuation is concerned, unless and until the Department had prima facie material to show that there was gross undervaluation, the valuation adopted by the assessees, based on the guideline value issued by the Government, cannot be faulted. ITSC was right in finding that the Revenue could not offer any evidence in their defence with regard to valuation of the properties. Even while examining the issue regarding cost of construction of the building, the ITSC took note of certain seized documents, which showed the cost of construction of two buildings at Rs. 1.90 Crores and the said shortfall should be added. We need not labour much on the other issues, as the ITSC examined each of the issues and wherever required, it has added the shortfall. Therefore, by referring to one sentence in paragraph 7.1.2 of the common order passed by the ITSC, it cannot be stated that there was no full and true disclosure. The findings in paragraph 7 have to be read in its entirety, which had several sub-paragraphs and which considered the case of the assessees on various heads culminating in paragraph 7.7, which deals with withdrawals or drawals of the assessees from bank accounts. The ITSC found that the drawals were inadequate and therefore, ordered Rs. 5 lakhs to be added in the hands of both the individual assessees for the relevant assessment years. Therefore, we find that there is no perversity in the approach of the ITSC and bearing in mind the conduct of the assessees that they approached the ITSC with true spirit of settlement, the ITSC granted relief. Learned Single Judge ought not to have set aside the common order passed by the ITSC and remanded the matter to the Assessing Officer to follow the consequential assessment procedure without recording any finding as to whether there was any procedural error committed by the ITSC or any error with regard to the decision making process. Single Judge, in the impugned order, has not recorded any finding that the ITSC contravened the provisions of the Act nor there is any finding recorded duly supported by material that the common order passed by the ITSC suffers from patent illegality. In such circumstances, we are of the clear view that the common order passed by the ITSC ought not to have been interfered with.

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• 2021 (9) TMI 163
  Computation of Capital Gains - Accrual of receipt - Inclusion of amount (as part of sale consideration) retained in the Escrow Account for meeting liabilities and obligation - HELD THAT:- When we examine the Business Sale Agreement, it is not disputed by the parties that the full and final consideration after having agreed upon the full and final consideration, the parties agreed to retain a particular amount of money in an Escrow account which cannot be construed to take away the case of the assessee from the expression accrued occurring in Section 48. Conduct of the assessee and the purchaser in retaining a particular amount of money in the Escrow account cannot take away the amount from the purview of full consideration received/accruing in favour of the assessee for the purpose of computation of capital gains under Section 48. As going by the case as projected by the assessee, the amount of Rs. 3.25 Crores is retained in an Escrow account and the right of the assessee has not been disputed and that amount was retained to cover four contingencies which are part of the indemnity clause and assuming certain payoffs were to be made from the retention money that will not in any manner alter the full and total consideration received by the assessee pursuant to the Business Sale Agreement and if such is the factual position, undoubtedly, the entire sale consideration had accrued in favour of the assessee during the assessment year under consideration. Even assuming that certain payments have been made from the amount retained in the Escrow account, it will not make or in any manner reduce the cost of acquisition.Tribunal was right in allowing the appeal filed by the revenue and set aside the order passed by the CIT(A). - Decided against assessee.

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• 2021 (9) TMI 162
  Validity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - proof of procedural error committed by the ITSC or any error with regard to the decision making process - full and true disclosure - learned Single Judge has set aside the order of ITSC - appropriate valuation method to be treated to be a perverse decision - Whether assessees having satisfied the requisite conditions provided u/s 245H and having cooperated with the proceedings before the ITSC and made full and true disclosure of their income, they were granted immunity from penalty and prosecution under the Act? - whether the filing of applications by the assessees for settling the cases is a genuine attempt of the assessees wherein the assessees fully and truly disclosed all material particulars bearing in mind that it is they who approached the ITSC to settle the dispute? - HELD THAT:- We find that the reasons assigned by the ITSC for coming to such a conclusion as to what would be the appropriate valuation method cannot be treated to be a perverse decision. With regard to the aspect as to whether the there was a full and true disclosure by the assessee, this has been considered by the ITSC, which recorded that the assessee cooperated with the proceedings before the ITSC. In fact, this has also been recorded so by the learned Single Judge in the impugned order - ITSC also noted the conduct of the assessee during the course of the proceedings. As pointed out earlier, the first report as per Rule 9 of the said Rules was submitted in June 2013, the comments were filed by the assessee before the ITSC to the said first report on 05.7.2013 and thereafter, a verification report was submitted and the comments were furnished to the assessee where the assessee offered additional sum by way of further disclosure. Aspects were noted by the ITSC and the conduct of the assessee was examined qua the aspect of full and true disclosure and in paragraph 7.4, while dealing with the aspect as to whether the assessee would be entitled for immunity, the ITSC clearly recorded that the assessee readily agreed to abide by the directions that would be issued by the ITSC and that the direction for further disclosure was not because the assessee accepted any understatement of income, but basically with a view to bring quietus to the matter and in the spirit of settlement - further disclosure pursuant to the verification report submitted before the ITSC, which was a further report u/s 245D of the Act cannot be construed to non suit the assesssee that she has not made a full and true disclosure before the ITSC at the first instance. If a very rigid approach is taken in this regard, then the very purpose of enacting Sub-Section (6) of Section 245D of the Act would lose its purpose. In any event, we find that there is no error in the decision making process and as pointed out, we are not expected to substitute the decision of the ITSC, which has taken note of the conduct of the assessee, who was in the spirit of settlement subject to conditions - we are of the view that the order passed in the said writ petition calls for interference. Assessee had raised a preliminary objection with regard to the maintainability of the said writ petition filed at the instance of the Revenue against challenging the order passed by the ITSC - this issue had come up before us in other appeals as well and certain writ appeals were admitted to decide this question of law as to the maintainability of writ petitions filed by the Department questioning the order passed by the ITSC. In the case on hand, we have not ruled on the aspect regarding maintainability of the said writ petition, as we are fully satisfied that there is no error in the decision making process committed by the ITSC nor the order passed by the ITSC can be construed to be perverse or illegal warranting interference under Article 226 of The Constitution of India. Therefore, the question of law as regards maintainability of writ petitions as against orders passed by the ITSC is left open to be agitated in the proper proceedings at appropriate stage.

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• 2021 (9) TMI 161
  Deduction of research and development expenses u/s. 35(2AB) - Scope of amendment to sub-section (3) of section 35 - grant of approval for deduction u/s. 35(2AB) with the office of DSIR - HELD THAT:- As relying on decision of Sun Pharmaceutical Ind. Ltd.[ 2017 (8) TMI 933 - GUJARAT HIGH COURT] and amendment to sub-section (3) of section 35 w.e.f. 1-04-2016 for furnishing of report, we consider that there is nothing before us on hand differs from the cases cited (supra) so as to take a different view on this issue - since the issue on hand being squarely covered following the principle of consistency, we find merit in the submission of the assessee and allowed the claim of deduction. Therefore, this ground of appeal is allowed. Disallowance of commission u/s. 40A(2)(b) - AO disallowed the expenditure incurred on payment of commission to persons specified u/s. 40A(2)(b) stating that assessee has failed to establish the genuineness of the expenditure - HELD THAT:- As observed that during the course of assessment, the assessee has explained the specific services rendered by the parties to whom the commission was paid along with the detail of their expenses and TDS on the transaction of commission payment - assessee placed copies of invoices raised by the commission agent, along with ledger account, acknowledgement of income tax return for A.Y. 2013-14 - assessee has also enclosed the copies of I.T. returns filed by these parties showing the amount of commission earned in their return of income - AO has not made any further verification, investigation and examination from the parties to whom the sales were made through the commission agents to disprove the facts reported by the assessee in its submission - AO has not demonstrated any material or information gathered to disprove the genuineness of the expenditure incurred on commission payment - Decided in favour of assessee.

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• 2021 (9) TMI 160
  Revision u/s 263 - deduction u/s. 80P(2) - case was subject to scrutiny assessment and order u/s. 143(3) finalized - CIT held that assessment order passed was erroneous and prejudicial to the interest of revenue since the Assessing Officer has failed to carry out enquiries/verification in respect of claim of deduction made u/s. 80P(2)(d) - HELD THAT:- AO has categorically made specific verification on the impugned issue of claim of deduction u/s. 80P of the Act which was the basis for an action under section 263 - AO has considered the submission and documentary evidences produced by the assessee during the course of assessment proceedings - we consider that order passed under section 263 of the Act is not sustainable in law, therefore, order passed u/s. 263 is quashed - Decided in favour of assessee.

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• 2021 (9) TMI 159
  Deduction u/s 54 - Proportionate deduction - Denial of deduction as capital gains arising out of sale of original asset was not deposited in the Capital Gain Deposit Account - Assessee had claimed exemption for having invested the capital gains in the new residential house - HELD THAT:- Though assessee purchased the residential site and incurred the expenditure the assessee failed to deposit the balance amount in the account notified by the Central Govt within extended period due to litigation, hence the assessee is not entitled for deduction to the extent of balance amount which was not invested under an account notified by the Central Govt. Deduction under this section is restricted to proportionate amount invested in purchase of new residential site for the purpose of construction of new residential house after sale of the original asset and also amount invested in construction of property. The intention of legislature was that either the assessee has to purchase or construct new residential house out of net sale consideration received by sale of original asset or deposit the same in the account notified by the Central Govt. u/s. 54 - If the assessee failed to do so, he is liable for capital gain on the transfer of capital asset. In the present case, the assessee purchased the residential site and used portion of net sale consideration for construction of new house and not appropriated the balance sale consideration either in investment in construction of residential house or deposit into account notified by the Central Govt. to avail exemption u/s. 54. Hence the assessee is entitled for deduction only to the extent of amount used for purchase of residential site only - Decided partly in favour of assessee.

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• 2021 (9) TMI 140
  Deduction u/s.80P(2)(d) - interest income and dividend income claimed as deduction on deposits and investments with co-operative banks not to be allowed to the assessee either under section 80P(2)(a)(i) or 80P(2)(d) - HELD THAT:- The Hon ble Karnataka High Court in the case of PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER vs. TOTAGARS CO-OPERATIVE SALE SOCIETY [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] took a view and held that interest income earned on deposits whether with any other bank will be in the nature of income from other sources and not income from business and therefore the deduction u/s.80P(2)(d) of the Act cannot be allowed to the assessee. The Hon ble Court followed decision of Hon ble Gujarat High Court in the case of SBI [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] held that interest income is not income from business but was income chargeable to tax under the head income from other sources and therefore there was no question of allowing deduction u/s.80P(2)(d). If there are statutory compulsions that the money should be invested in a particular manner to run business of the Assessee then the interest income arising from such investments whether can be said to have business nexus and therefore should be considered as income derived from the business of providing credit facility to the members, requires examination. This aspect requires examination by the AO as it has not been raised before the CIT. We therefore modify the order of the CIT(A) by remanding the issue examination afresh. Deduction u/s.80P(2)(d) - what is the quantum of interest income that should be brought to tax by the AO, in case the deduction is denied to the Assessee u/s.80P(2)(d)? - As decided in THE PUTTUR PRIMARY CO-OP AGRICULTURE AND RURAL DEVELOPMENT BANK LTD. [ 2021 (6) TMI 460 - ITAT BANGALORE] tribunal held that the Assessee should be allowed expenses and the entire gross interest cannot be taxed - AO will afford opportunity of being heard to the assessee and filing appropriate evidence, if desired, by the assessee to substantiate its case, before deciding the issue in the set aside proceedings. Appeal of the assessee is treated as partly allowed for statistical purpose.

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• 2021 (9) TMI 139
  Weighted deduction claimed u/s.35 (2AB) on research and development expenditure - expenditure incurred outside India for which the assessee raised a claim of weighted deduction u/s.35(2AB) - HELD THAT:- On a conjoint reading of section 35(1) (iv) read with section 35(2), it is manifested that any expenditure of capital nature incurred on scientific research, other than the cost of land etc., qualifies for full one time deduction in the year of such incurring. Unlike sub-section (2AB), sub-section (1) does not require any specific approval from the prescribed authority for this purpose - there is no stipulation that the expenditure should be incurred in India or outside or in-house R D facility or otherwise, save and except as provided in other clauses of subsection (1) of section 35. However, the amount of deduction u/s.35(1) is equal to the amount of capital expenditure on scientific research. Coming back to the amount of expenditure incurred by the assessee outside India we find that the expenditure of revenue nature was claimed by the assessee as revenue expenditure and accordingly allowed also. It is only the remaining capital expenditure that qualifies for deduction u/s.35(1)(iv). Exception to the claim of the ld. AR for granting Deduction of the capital expenditure on scientific research and development incurred outside India u/s.35(1)(iv) -The amount does not qualify for the weighted deduction. The fact that the claim of the assessee cannot be entertained under one provision does not oust it from consideration under any other provision, if it is otherwise allowable under such latter provision. We have noticed that the amount of capital expenditure incurred on research and development outside India is eligible for deduction u/s.35(1)(iv). The same, therefore, has to be allowed as such. DR s contention in this regard is sans merit and hence repelled. The entire amount of R D expenditure incurred in India is eligible for weighted deduction u/s 35(2AB); revenue R D expenditure incurred outside India as claimed by the assessee got allowed in the assessment itself; total of capital R D expenditure incurred outside India will be eligible for deduction u/s 35(1)(iv) of the Act.

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• 2021 (9) TMI 138
  Disallowance u/s 14A r/w rule 8D - Addition made with reference to the income claimed as exempt - HELD THAT:- As decided in own case [ 2018 (12) TMI 1905 - ITAT MUMBAI] Assessee s own funds are more than the investment as explained - We have gone through the entire facts regarding available of funds and noticed that the presumptions as held by Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] is in favour of assessee because the Revenue could not establish any nexus with the expenses claimed by assessee vis- -vis exempt income. In the absence of the same, the presumptions in favour of assessee and hence, we delete the addition. As delete the addition on the issue of satisfaction. This issue of assessee s appeal is allowed. TP Adjustment on account of guarantee commission u/s 92C - HELD THAT:- As decided in own case [ 2018 (12) TMI 1905 - ITAT MUMBAI] guarantee commission is to be charged at 0.5% as bench mark by the assessee - we are of the view that no further adjustment to determine the ALP is to be made. This issue of assessee s appeal is allowed. TP Adjustment on Charging of interest on share application money - TPO held that since the shares are not allotted within a reasonable period, the share application money is in the nature of temporary funding till the allotment is made and proposed interest rate @ 14% and calculated the adjustment - HELD THAT:- Share application money being capital account transaction is outside the purview of section 92 of the Act and the transfer pricing adjustment cannot be made on capital account transactions as per the decision of VODAFONE INDIA SERVICES PVT. LTD.[ 2014 (10) TMI 278 - BOMBAY HIGH COURT] - Decided in favour of assessee. Short deduction of TDS - TDS u/s 194C or 194J - Addition u/s 40(a)(ia) - Payment relating to processing charges, photo guard coating and subtitling charges - HELD THAT:- As provisions of section 40(a)(ia) of the Act are applicable in case of non deduction of TDS. Provisions of section 40(a)(ia) of the Act are not applicable in case of short deduction of TDS and for this proposition, in our considered opinion, the learned CIT(A) has perfectly relied upon the findings given in Vodafone India Services Pvt. Ltd. [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] . In the present case, the assessee has deduction TDS under section 194C of the Act and deposited the same with the Government. Since the conditions of section 40(a)(ia) of the Act are fulfilled, provisions of section 40(a)(ia) of the Act in not applicable. Excess claim of expenses due to write off - HELD THAT:- Since the income on account of withdrawal from business restructuring reserve is recorded in the current year, the corresponding expense on account of discount on commercial paper cannot be allowed in the subsequent year, as held by the Assessing Officer, and the Assessing Officer ought to have allowed the expenses in the current year itself. Consequently, we see no legal infirmity in the impugned decision of the learned CIT(A) warranting us to interference with his order at the instance of the Revenue. Nature of expenses - debenture issue expenses - Revenue or capital expenditure - AO disallowed the claim on the ground that the assessee has not debited the debenture issue expenses in the Profit Loss Account but debited it to the securities premium account which is capital in nature and cannot be considered as revenue expenditure claimable under section 37 - HELD THAT:- CIT(A) has perfectly held that the debenture has character of loan unlike share capital and hence the debenture issue expenses are permissible deduction. The learned Departmental Representative has not brought anything on record contrary to the submission of the learned Counsel and the decision of the learned CIT(A) to enable us to take a view other than the view taken by the learned CIT(A). - Decided against revenue.

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• 2021 (9) TMI 137
  Deduction u/s.80P - profits earned by the appellant from the business of providing credit facilities to its members - HELD THAT:- Associate/nominal members, Hon ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] has held that the expression Members is not defined in the Income-tax Act. Hence, it is necessary to construe the expression Members in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act - Accordingly, we remit this issue of deduction u/s. 80P(2)(a)(i) of the Act to the file of Assessing Officer to examine the same afresh in the light of the above judgment. Deduction u/s 80P(2)(a)(i) - interest from investments made in commercial banks, South Canara district cooperative banks, co-operative societies - HELD THAT:- In the case of the Totgars Co-operative Sale Society Ltd. Vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] held that, Income from utilisation of surplus funds was taxable under the head income from other sources, and therefore not eligible for deduction u/s 80P - we remand this issue back to the Ld.AO to verify the interest earned from investments made in co-operative societies that is eligible for deduction under section 80P(2)(d).

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• 2021 (9) TMI 136
  Rectification of mistake u/s 154 - application of provision of 50C on sale of an asset - set off of brought forward business loss against Technical Short Term Capital Gains arising out of the sale of depreciable business assets - AO brought to tax the brought forward business loss which was reduced from STCG - HELD THAT:- As assessee itself has offered the income under the head Short Term Capital Gain and not as business income. Therefore, under the provisions of section 72(1), the brought forward business loss can be set off only from business income and cannot be set off from STCG. The assessee has not been able to controvert this find of the lower authorities. Therefore, the assessee s appeal is dismissed on merits.

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• 2021 (9) TMI 135
  Addition u/s.69B - unexplained investment - HELD THAT:- No discrepancy had been pointed out by the revenue with regard to transactions that had happened during the year - AO had admitted the fact that the discrepancy had happened in earlier year. While it is so, there is absolutely no case for the Revenue to make any addition towards unexplained investment during the year. It is not in dispute that the transactions during the year did not contain any discrepancies. All the transactions during the year remain properly explained by supporting documents. Admittedly, partner s capital account is reflected in the liability side of the balance sheet, for which, even if there is any discrepancy, there cannot be any addition towards unexplained investment in the hands of the assessee firm u/s.69B as made by the lower authorities. Hence, we have no hesitation to delete the addition made on account of unexplained investment u/s.69B. TDS u/s 194C - Disallowance of expenditure u/s.40(a)(ia) - HELD THAT:- In the case of CIT vs. S.K. Tekriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] had held that the provisions of Section 40(a)(ia) of the Act could not be made applicable for short deduction of tax at source. In the instant case before us, admittedly, the assessee had deducted tax @1% of total payments made to M/s. Revitt Engineering. The case of the revenue seems to be that tax should have been deducted at higher rate u/s.194C for which disallowance u/s.40(a)(ia) of the Act was made - we direct the AO to delete the disallowance u/s.40(a)(ia) of the Act in the facts and circumstances of the instant case. Accordingly, the ground No.2 raised by the assessee is allowed.

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• 2021 (9) TMI 133
  Estimation of income - bogus purchases - CIT(A) restricted the addition to the extent of 25% of the alleged bogus purchases - HELD THAT:- Disallowance of 25% of alleged bogus purchases are sufficient to fulfil the possibility of revenue leakage. Thus, we affirm the order of the ld. CIT(A). Deduction under section 80IA - enhanced profit of eligible deduction - assessee made a prayer that once source of income of assessee from eligible unit is accepted, the assessee is entitled for enhanced profit of eligible deduction under section 80IA - HELD THAT:- CIT(A) after appreciating the fact held that when part of the purchases is disallowed and the income is enhanced, the enhanced profit of the unit is also eligible for deduction under section 80IA of the Act. It was also held that deduction is allowed on total income finally assessed and not on the book profit alone, accordingly the Assessing Officer was directed allow the deduction under section 80IA on resultant income confirmed in first appeal. In our view the ld CIT(A) took a reasonable view, which we affirm. No contrary facts or law is brought to our notice to take other view, thus, we affirm the order of the ld. CIT(A). Appeal of the Revenue is dismissed.

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• 2021 (9) TMI 132
  Deemed dividend u/s. 2(22)(e) - AO noticed that assessee has shown in his return of income salary income in the capacity of directors of two companies - AO had not accepted the contention of the assessee that advances were against salary as well as incentive payable by the Biotech Vision Case Pvt. Ltd., and held that assessee has earned deemed dividend - CIT- A deleted the addition - HELD THAT:- Assessee has included the amount of salary and incentive received from the company in his income and categorically shown that the aforesaid amount was received from the companies after deduction of TDS - we consider that action of Assessing Officer in taxing the impugned amount as deemed dividend has resulted into double addition on same income which has already been included by the assessee in his income. Therefore, we do not find any infirmity in the decision of ld. CIT(A). Therefore, the appeal of the revenue is dismissed.

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• 2021 (9) TMI 131
  Exemption u/s.11 - salary paid to the trustees was by way of undue benefit given to them - Denial of exemption to the assessee trust on account of income found to have been applied for the benefit of the related persons, as per the provisions of section 13(1)(c) read with section 13(3) of the Act - HELD THAT:- Where the current trustees had stepped in the shoes of their founder trustee fathers and took the trust from strength to strength since then, on the strength of their highly educated background and work experience, the finding of the Revenue that the fact of their having rendered services needed to be established with documentary evidences, we cannot agree with - it is on account of their role as President and Chairman of the trust and with their educational background and experience the trust has gone to strength to strength - no denial that the overall management of the trust rests with the trustees, Chairman and President of the trust, it is definitely not left to the employees who are employed to carry out day-to-day duties and the fact that the trust has advanced in the past years since the two trustees took over, clearly demonstrates the amount of work and involvement of two trustees in the trust. Finding of the Revenue that in the absence of any evidence demonstrating that the trustees had rendered services to the trust, the salary paid to them has tantamounted to undue benefit being given to them, we find is not in consonance with the facts of the case and is rejected. Basis adopted by the Revenue authorities for quantifying the undue benefit given to the aforesaid trustees, by comparing with the salary paid to employees of the trust i.e. the members and other working staff, is unreasonable. The quality of work rendered by the management of the trust on one hand, which includes the two trustees, and that by the employees of the trust, who are involved only in execution of the decisions taken by the management and other day-to-day activities, is totally different and there can be no comparison between the two. Therefore, the basis adopted for determining the undue benefit to the two trustees is also not found to be correct. - Decided in favour of assessee.

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• 2021 (9) TMI 130
  TP Adjustment - non granting of adjustment on import duty - HELD THAT:- This issue was considered by this Tribunal in assessee s own case in A.Y 2013-14 [ 2021 (7) TMI 36 - ITAT DELHI] and has decided this issue against the assessee and in favour of the Revenue to hold as necessary consumption of the material is only booked in the profit and loss account for which the materials are imported for onward sale/manufacturing whose revenue has been booked in the profit and loss account, the above adjustment cannot be granted. This is so for the reason that the duty structure of the material imported by the assessee and the sale price of the assessee takes into consideration all these commercial aspects of the trading or operation of the business of the assessee. Refusal of capacity adjustment as asked by the assessee - HELD THAT:- As in assessee s own case in A.Y 2013-14 [ 2021 (7) TMI 36 - ITAT DELHI] to hold that as assessee has submitted complete details of the employees stating their name, designation, experience, educational qualification, role and responsibility and the amount of salary paid, more particularly when there is a disproportionate difference between the salary expenditure incurred by the comparable companies with the salary expenditure of the assessee and there are seconded employees who are necessarily deputed to the assessee for the purpose of development of the business, the claim the assessee needs to be re-examined with the details furnished. This is more so when learned dispute resolution panel accepted that there is a higher depreciation claim in the case of assessee compared to the comparable companies. Computation of transfer pricing adjustment - AO allocating the entire difference between the arm s length operating profit and actual operating profit to the controlled transactions of the appellant - HELD THAT:- As relying on KEIHIN PANALFA LTD. [ 2016 (5) TMI 203 - DELHI HIGH COURT] we direct the Assessing Officer to accept the computation of proportionate TP adjustment as computed by the assessee and as exhibited elsewhere in this order

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• 2021 (9) TMI 129
  Penalty u/s 271D - contravention of provisions of section 269SS - receipt from director - as per assessee quantum addition u/s. 68 has become final in the hands of the appellant firm treating the amount received as appellant companies income by the Assessing Officer in his order and assessee paid taxes thereon - appellant s case that the receipt from director being not a loan or deposit, the provisions of section 269SS are not applicable - HELD THAT:- As in the matter of CIT vs. Shyam Corporation [ 2013 (2) TMI 908 - GUJARAT HIGH COURT ] wherein it is held that if assessee received booking advance in cash which, during assessment proceedings, had been assessed as undisclosed income of assessee under section 68 of the Act-Whether such amount could be considered as deposit/loan in violation of section 269SS/269T for levy of penalty u/s. 271D/271E. The Hon ble High Court has decided matter in favour of assessee. Apart from above said judgment, assessee also cited a judgment Young Men Christian Association [ 2014 (8) TMI 40 - MADRAS HIGH COURT ] wherein it is held once certain amount was subjected to tax u/s 68, question of treating it as transaction in violation of section 269SS or section 269T did not arise as it stood mutually excluded - we allow the appeal of the assessee.

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• 2021 (9) TMI 128
  Capital gain computation - JDA Entered twice - first development agreement was cancelled - HELD THAT:- As earlier JDAs were not materialized, on the basis of which assessments were completed by the AO. Therefore, capital gains in AY 2013-14 in the hands of the assessee do not arise, Considering the additional evidence submitted by the assessee before us as per rule 29, it is clear that construction activity is going on, which shows that the JDA made on 29th April, 2017 is materialized - in our considered opinion, capital gains computed by the AO for the impugned AY 2013-14 is not correct and upholding the order of the CIT(A) in deleting the addition made by the AO on account of capital gains in the hands of the assessee, we dismiss the grounds raised by the revenue on this issue. JDA executed on 29th April, 2017 which was materialized and as we have decided the issue against the revenue cited supra , therefore, in the interest of justice give direction that AO is directed to take necessary action for determining the capital gains on impugned property in the respective year/years.

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• 2021 (9) TMI 127
  Exemption u/s 11 - rejecting the application for registration u/s.12A as the Assessee has not yet commenced its charitable activities - Whether Society has to carry out charitable activities for entitling to exemption u/s 12AA? - HELD THAT:- As the society has given donation, but, the CIT(E) has not found the same as per section 2(15) - AR also could not produce any details before us to establish that the details of donation paid to the activities which are charitable in nature - As assessee requested that the matter may kindly be restored to the file of CIT(E) to demonstrate that the activities of the society are genuine as per the object clauses of the society. Considering all we remit the issue back to the file of CIT(E) with a direction to decide the issue after examining the details, which will be put-forth before him by the assessee regarding the charitable activities of the society and in accordance with law after providing reasonable opportunity of hearing to the assessee - Appeal of the assessee allowed for statistical purposes.

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• 2021 (9) TMI 126
  Advance amount received - unreported receipts from Wardha Power Co .- appellant stated that the same was part of advance money received from the party and which was subsequently assigned to M/s. Viz Projects Pvt. Ltd. as part of settlement agreement - HELD THAT:- As assessee demonstrated that the assessee transferred the work and outstanding balance to M/s VIZ. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting the addition being the advance amount received from Wardha Power Pvt. Ltd. and upholding the order of CIT(A), we dismiss the ground raised by the revenue on this issue. Addition u/s 40(a)(ia) - service fee paid without effecting TDS - AO considered the same as contingent liability and also disallowed it as a payment which cannot be allowed as a revenue expenditure - HELD THAT:- As per the agreement dated 26/09/2005 entered into between assessee and Amongst VIZ Projects Pvt. Ltd. Sainj as per clause 7, the assessee shall pay the service at 10% on the upset amount of Rs. 50 crores to VIZ and Sainj in proportion to the amounts set up by them before end of November, 2006 - liability of 5 crores is not contingent in nature and was liability for the year under consideration and the assessee has rightly the same as revenue expenditure in view of the said agreement - No infirmity in the order of the CIT(A) in deleting the addition of Rs. 5 crores made by the AO u/s 40(a)(ia) treating it as contingent in nature. Accordingly, the ground raised by the revenue on this issue is dismissed. Addition of damages for idling of their facilities and loss of business - HELD THAT:- As the assessee had foregone the claim of damages regarding idling as granted by the arbitrator vide the final agreement letter dated 11/05/2010 with HPCL. Based on this letter, the CIT(A) deleted the addition made by the AO treating the awarded claim of damages regarding idling as granted by the arbitrator, as income of the assessee, without taking into consideration the documentary evidence. Therefore, we find no reason to interfere with the order of the CIT(A) on this issue and upholding the same, we dismiss the ground raised by the revenue on this issue.

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• 2021 (9) TMI 125
  Disallowance of deduction u/s 80IB(11A) - Nature of business of the assessee - business of processing, preservation and packaging of fruits or vegetables and the assessee received agricultural produce - AO observed that the assessee is involved in running cold storage for rental purposes and that it did not carry on integrated activities of handling, storage and transportation of goods, as per the audit report furnished by the assessee in Form No. 10CCB - HELD THAT:- On perusal of the written submissions and entire documents available before us as well as from the financial statements, we do not find any entry towards transportation expenses debited by the assessee in the P L Account. If the assessee has paid to third parties towards transportation expenses, it must have been reflected in its books of account, but, there is no such expenses debited by the assessee in P L Account. If the assessee has undertaken transportation of food grains, there must be vehicle expenses debited in the account, but, no such expenses were found from the financial expenses. The submission of the assessee with regard to movement of goods from one place to other places is a normal activity within the cold storage area for keeping seeds at an appropriate place inside the cold storage - no substance in the submission of the ld. AR that expenditure towards transportation has been incurred. In the financial statements there is no expenditure is shown under the head petrol, diesel, oil and lubrications, maintenance, or vehicle hire charges, etc., which shows that the assessee has not incurred an expenditure towards petrol, diesel etc. for transportation of food grains. On perusal of tax audit report, the nature of the business activity of the assessee has been shown as cold storage services and in financial statements also as well as as per the orders of lower authorities, Form 10CCB also does not reflect that the assessee is carrying or engaged in the business of handling, storage and transportation of food grains and also not taking of any business of processing and packaging of goods or vegetables vide sl. Nos. 24(b) and 24(c) respectively. No doubt, the assessee is operating cold storage, but, other ingredients for eligibility of deduction is not satisfied. The assessee failed to establish that it had incurred expenses towards hamali charges and transportation of food grains. The case law relied upon by the assessee are distinguishable on facts to the case of the assessee. Res-judicata does not apply in this case. AR also failed to produce earlier AYs orders passed u/s 143(3) of the Act to show that any deduction was granted u/s 80IB(11A) - We do not find any infirmity in the order of the CIT(A) wherein he held that the assessee is not entitled for deduction u/s 80IB (11A) - Decided against assessee.

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• 2021 (9) TMI 124
  Nature of receipt - grant received by the assessee from the Government of Andhra Pradesh - revenue or capital receipt - sales tax paid is received as a grant from the State Govt - HELD THAT:- Assessee has to receive 25% of the sales-tax paid during financial year will be ploughed back as a grant by the Government towards the payment of sales tax during the next year and the benefit will be available for 5 years from the date of commencement of production i.e., up to 6th year. In the present case, the assessee has commenced the manufacturing on 6/4/2007 and the assessee is selling the products and collecting the sales tax and later on it is paid to the Govt. of AP and in the next year, 25% of the total sales tax paid is received as a grant from the State Govt. There is no doubt that the sales tax is a liability on sales made by the assessee and collected from the purchaser of goods and later on paid to the Government as a sales tax liability. As the subsidy received by the assessee in the form of refund of sales tax paid from the Sate Govt of AP is to be treated as revenue receipts. Therefore, all the appeals filed by the revenue on these grounds are allowed. Disallowance u/s 14A - proof of exempt income earned by the assessee - HELD THAT:- As perusing the entire material available on record and the orders of the Authorities below, we observe that the disallowance made U/s. 14A of the Act has rightly been allowed by the Ld. CIT(A). We find from the order of the Ld. CIT(A) that there is no exempt income earned by the assessee during the impugned assessment year and he has relied on certain judgments while deciding the issue in favour of the assessee. The Hon ble Delhi High Court in the case of Cheminvest Ltd.[ 2015 (9) TMI 238 - DELHI HIGH COURT] has held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year. Therefore, as per our considered view, we do not find any infirmity in the order of the Ld. CIT(A)

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• 2021 (9) TMI 123
  Rectification of mistake - Income deemed to accrue or arise in India - determination of income attributable to India - as argued Tribunal while adjudicating the Ground of appeal No. 6 had failed to consider the main arguments /submissions of the assessee on the basis of which it had assailed the taxability of certain revenues in its hands, viz. (i). membership fees; (ii). fees for IATA Clearing House Facility (ICH facility); and (iii). BSP Link charges - HELD THAT:- As the Tribunal had failed to address and therein adjudicate the specific contentions that were raised by the assessee in the course of the hearing of the appeal in furtherance of its claim that the aforesaid revenues, viz. (i). membership fees; (ii). fees for IATA Clearing House Facility (ICH facility); and (iii). BSP Link charges were not taxable in India, therefore, to the said extent the order passed by it while disposing off the assessee s appeal [ 2021 (6) TMI 2 - ITAT MUMBAI] suffers from a mistake which being apparent from record renders the order amenable for rectification under sub-section (2) of Sec. 254.

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• 2021 (9) TMI 122
  Validity of Reopening of assessment u/s 147 - whether the assessee s taxable income liable to be assessed had escaped assessment or not? - HELD THAT:- AO appears to have made a clear cut observation that he needed to verify the facts as to whether the assessee s lands are agricultural or not. And also to ascertain if she had suppressed her receipts or not (supra). We thus quote hon ble Bombay high court s landmark decision in Hindustan Unilever Ltd. Vs. R.B. Wadkar [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] that re-opening reasons have to be read on stand alone basis without any possibility of addition, deletion or substitution therein at any latter point of time and quash the impugned re-opening itself for having failed to record the appropriate reasons pin pointing escapement of assessee s taxable income from being assessed. Hon ble apex court s recent landmark judgment in Commissioner of Customs Vs. Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT] also holds that the provisions in the Act have to be strictly construed only. We thus adopt the very principle mutatis mutandis and quash the impugned re-opening/re-assessment in above terms - Decided in favour of assessee.

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• 2021 (9) TMI 121
  Validity of assessment against non-existent entity - scheme of amalgamation conceived - Assessment pertains to the original assessee/amalgamating entity - valid assessment in case of a surviving entity - HELD THAT:- Lower authorities had issued Section 142(1) notices; even post amalgamation, to former entity, M/s. Vivimed Labs (Alathur) Pvt. Ltd., only. So far as the Revenue s arguments that with reference to the lower authorities have duly incorporated names of both these entities, we find that it had adopted the very line of reasoning before their lordships in paras 17(i) as well as (vii) thereof which stood rejected in the hon ble apex court. We further note that their lordships have considered all these issues in the foregoing detailed judgment whilst concluding that such an assessment does not satisfy the legal requirement involving a duly existent entity. As lastly contended that the lower authorities could not be allowed to escape their liability to escape from their duty to frame a valid assessment in case of a surviving entity only just by quoting the former entity s PAN (supra) since the same ceases to exist post amalgamation. Be that as it may, the fact remains that we have taken note of all the case material on record suggesting the learned lower authorities to have issued notice(s) (supra) to a non-existent entity only which renders the entire assessment as an invalid one. - Decided in favour of assessee.

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• 2021 (9) TMI 120
  Levy of penalty u/s. 271(1)(c) - AO has issued notice for both limbs and levied penalty for one limb - as per AO assessee has concealed particulars of income in respect of income declared in return of income filed in response to notice issued u/s. 148 - Assessee argued as no specific charge on the assessee made whether he is levying penalty for concealment of particulars of income or furnishing inaccurate particulars of income - whether the case of the assessee falls under Explanation-(1) or Explanation-(3) to Section 271(1)(c) ? - HELD THAT:- Although the AO has issued notice on the ground of concealment of particulars of income or furnishing inaccurate particulars of income, but finally he has levied penalty for concealment of particulars of income. It is not the case of the assessee that the AO has initiated penalty proceedings for concealment of particulars of income, but has levied penalty for furnishing inaccurate particulars of incom - case law cited by the ld. AR for the assessee has no application, because the AO has given opportunity to the assessee to show-cause for which, the assessee has filed his explanation and thereafter the AO has clearly recorded that it is a case of concealment of particulars of income - under similar circumstances in the case of Grass Field Farms Resorts (P) Ltd. [ 2015 (9) TMI 1585 - ITAT JAIPUR] held that notice cannot be held as invalid merely for the reason that the AO has issued notice for both limbs and levied penalty for one limb. There is no error in the reasons given by the ld. CIT(A) to confirm penalty levied by the AO u/s. 271(1)(c) - Decided in favour of Revenue.

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• 2021 (9) TMI 118
  Revision u/s 263 by CIT - Allowability of claim of deduction u/s. 80IB(10) - sufficient OR no enquiry - whether AO s order was erroneous nor prejudicial to the interest of revenue? - HELD THAT:- AO examining the completion certificate issued by Bhopal Municipal Corporation dated 06.06.2009 and again a clarification letter dated 29.03.2014 which was directly called by the Ld. AO assert the fact that the housing project was completed within the stipulated time as provided u/s. 80IB(10) and accordingly claim u/s. 80IB(10) was allowed - CIT has not made any independent enquiry even after observing that the Ld. AO has allowed the deduction u/s. 80IB(10) of the Act after obtaining the completion certificate, still held that no enquiries were conducted to examine the genuineness of completion of housing project. Under the provision of section 80IB(10) assessee has to obtain a completion certificate from a competent authority which in this case is the Bhopal Municipal Corporation which is a statutory body working under a separate Act. Once the Bhopal Municipal Corporation has given a certificate that housing project has been completed on a certain dates, Revenue authorities cannot deny the deduction u/s. 80IB(10) of the Act alleging that the housing project is not complete. In case they are not satisfied with the contents of the completion certificate issued by Bhopal Municipal Corporation, they have option to file a writ before the Hon ble Jurisdictional High Court but certainly they cannot deny the claim of deduction u/s. 80IB(10) of the Act which the assessee has claimed after obtaining all necessary certificate as well as the certificate from the Chartered Accountant and having fulfilled all the requirements of the provisions of section 80IB(10). AO has conducted sufficient enquiry, called for all necessary details and made proper application of mind and thus it can be safely concluded that the order u/s. 143(3) dated 31.03.2014 is neither erroneous nor prejudicial to the interest of revenue. - Decided in favour of assessee.

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• 2021 (9) TMI 114
  Disallowance of leave travel concession u/s 10(5) - LTC amount spent on traveling in India - as per DR no exemption is available for the amount spent on foreign travel journey out of LTC, and therefore, there is no merit in the claim of the assessee - HELD THAT:- As assessee drew our attention to a certificate from the State Bank of India wherein the Bank has given bifurcation of total amount of LTC given to the assessee as towards foreign travel, and towards domestic travelling. This detail was not with the assessee at the time of assessment, and could not be furnished when called for. Since, the same is now made available to the assessee by the Bank, the same is sought to be taken on record as additional evidence, and based on which, the claim of the assessee is to be allowed - since this detail was not made available to the AO at the time of assessment, and the AO has no occasion to consider the same, therefore in the interest of justice, we restore the issue back to the file of the AO to consider allowability or otherwise of claim - Appeal of the assessee is allowed for statistical purpose.

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• 2021 (9) TMI 113
  Rectification of mistake - Depreciation on electric wiring - Revenue challenging the action of CIT(A) in holding the assessee is entitled to claim depreciation @ 80% on electrical wiring as the same is integral part of windmill, in contravention of depreciation allowable on electrical fittings @ 10% as per Income Tax Rules, 1962 and also in upholding the contention that power generation from windmill is manufacturing and eligible for additional depreciation u/s. 32(1)(iia) - HELD THAT:- This Tribunal order in M/S. PRAGATI AROMA OIL DISTELLERS P. LTD. [ 2014 (8) TMI 1216 - ITAT PUNE] held that the Department did not serve the notice on the assessee and therefore, this Tribunal proceeded to dismiss the grounds of appeal raised by the Revenue for not serving notice on respondent assessee, but, however, we find this Tribunal has given liberty to file an application to recall the said order to decide on merits. DR, submits that the appellant Revenue is in a position to serve notice on the assessee if this Tribunal recalls the above order. Therefore, taking into consideration the findings of this Tribunal and also that the submissions of ld. DR in the interest of justice, we deem it proper to recall the order. Miscellaneous Applications filed by the Revenue are allowed.

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• 2021 (9) TMI 112
  Estimation of income - Bogus purchases - purchases from unverified sources / grey market leading to suppression of profit - addition @12.5% out of the alleged non genuine purchases in each assessment year - specific information from Sales-tax department to indicate that certain purchases made by the assessee in the assessment years under dispute are non genuine - HELD THAT:- The source of purchases at all stages remained doubtful. That being the case, the claim of the assessee that purchases have been made from the declared source is unacceptable - considering the fact that assessee failed to prove the source of purchases, it can be concluded that by adopting such means the assessee has suppressed its true profits. In the aforesaid scenario, disallowance at 12.5%, being the profit element embedded in the alleged non genuine purchases, in our considered opinion, is fair and reasonable; hence, does not call for any interference - Decided against assessee.

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• Customs

• 2021 (9) TMI 156
  Import of the vessel Jag Arnav , retrospectively amenable to customs duty or not - Levy of duty w.e.f. Retrospective effect - Constitutional validity of condition No.82 of Sl. No.462 of Notification No.12/2012 Cus. dated 17 th March, 2012 issued by the Department of Revenue, Ministry of Finance, Government of India - permission to convert the vessel Jag Arnav to coastal status and not to charge customs duty - withholding permission to convert the foreign going vessels of Petitioner No.1 to coastal run and from demanding any customs duty on all of the vessels imported into India prior to 17th March, 2012. HELD THAT:- Since the central plank of the submission of the Opposite Parties to justify the insistence on payment of customs duty on the vessel in question at the time of its conversion from foreign going vessel to coastal run vessel. Notwithstanding that it was imported which was in fact imported way back on 13th April, 2003, no customs duty was payable thereon and in support thereof reliance has been placed on the Notification 16/2012-Cus dated 13th June, 2012, the Court proposed to legally by examining that circular in some due date. The subject matter of the said circular issued by the CBEC procedure followed for import of Indian vessels and filing of import general manifest, bill of entry-regarding - The circular explains in detailed that the context in which it is being issued since the difficulties was brought to the notice of the CBEC by the INSA stating that the customs field formations are insisting on filing of Import General Manifest (IGM) and BOE even in respect of those vessels that were imported in the past and which were exempt from payment of import duty. Interestingly it is not in dispute that the Jag Arnav has, after its import into India, undertaken several journeys both to ports out outside India as also those within India. It is only after the impugned notification that permission for conversion into a coastal run vessel was sought by the Petitioner. However, that by itself would not attract the liability to pay customs duty on the entire value of the vessel since the import took place much earlier on 30 th April, 2003 at which point in time it was fully exempted from payment of any customs duty. In the present case since vessel Jag Arnav called in Indian port for the first time at Paradeep on 30th April, 2003, and at that relevant date it was exempt from payment of customs duty it cannot be made amenable to such duty nine years later by virtue of a condition in another exemption notification of March 2012. This Court concludes that in the present case exemption notification dated 17th March, 2012 is only prospective in its application and that in respect of the import of the three vessels i.e. Jag Arnav , Jag Ratan and Jag Rani which were imported into India first on 30th April 2003, 13th November, 2007 and 26th August, 2011 respectively, Entry 462 read with Condition No.82 of the notification dated 17th March, 2012 will not apply - it is not necessary for this Court to strike down the said entry or condition of the notification. It is held that the Opposite Parties would not be justified in insisting on payment of CVD by Petitioner No.1 for grant of conversion of the vessels from foreign going to coastal run since the vessels stand imported prior to the notification dated 17th March, 2012. The sum of Rs. 5,00,000/- deposited by Petitioner to this Court together with the interest accrued thereon will be released in favour of Petitioner No.1 by the Registry within four weeks - Petition allowed.

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• 2021 (9) TMI 151
  Constitutional validity of Rules 53 and 80 of the Special Economic Zone Rules, 2006 - rule was inserted by way of Clauses 28 and 33 of the Special Economic Zone (Amendment) Rules, 2018 dated 21.09.2018 - requirement of furnishing a Bank Guarantee of an amount equivalent to the penalty - HELD THAT:- It is undisputed that Petitioner has furnished the Bank Guarantee equivalent to the amount of the penalty i.e. for Rs. 10,07,42,260/- and the same is valid upto 07.09.2021. In terms of the Rule Position, there is a requirement of furnishing a Bank Guarantee of an amount equivalent to the penalty sought to be imposed - Learned Senior counsel for the Petitioner, on instructions, undertakes that the validity of the Bank Guarantee shall be extended for a further period of two years from 07.09.2021. An affidavit of undertaking to this effect shall be filed by the Petitioner within a period of 15 days from today enclosing therewith a photocopy of the extended Bank Guarantee valid upto 06.09.2023. Subject to the Petitioner extending the Bank Guarantee as aforesaid and filing an affidavit of undertaking, within the time granted by this Court, Respondents shall process the application of the Petitioner seeking exit from SEZ under Rule 74 of SEZ Rules - Petition disposed off.

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• 2021 (9) TMI 142
  Mis-classification and misdeclaration of imported goods - goods declared as Lime Mortar(Slaked lime) but goods were found to be in form of ash type powder - to be classified under CTH 25222000 or under CTH 38245090? - confiscation of goods - levy of penalty - demand of differential duty - entire case of the department is simply based on the test report of the product conducted by Customs House Laboratory, Kandla and opinion given by the testing authority - HELD THAT:- It is observed that the same goods was earlier tested when imported in 2013. When the following test report was given on the basis of which goods were cleared under CTH-25222000. The sample is in the form of greyish powder is composed mainly of calcium oxide together oxides of Iron, Aluminium and silicious matter. CaO contain 82.8%. It has expanding property. From the above report it is clear that the product is composed mainly of calcium oxide and very minimal portion is of Iron, Aluminium and siliceous matter. The calcium oxide contains 82.8%. With this report it cannot be said that the product is a preparation with additives. For the live consignment which was seized by CHL, Kandla issued report in questionnaire form an their opinion - Admittedly as per the test report the goods is mainly composed ofCalcium oxide.The other small portion of contents are iron, aluminium and silicious matters which obviously exits in any natural mineral product therefore, it is not established that the slaked lime is not a naturally occurred product but a preparation as contented by the revenue. Therefore, merely on the basis of the test report which is contrary to the opinion cannot be accepted. The quick lime when reacts with water it forms slaked lime and the slaked lime is calcium hydroxide. Accordingly, it is clear that the goods in question is slaked lime under chapter heading 2522. In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - revenue could not establish beyond doubt that the goods in question i.e. slaked lime (Lime Mortar) is classifiable under 38245090. Consequently, the goods are correctively classifiable under Chapter sub heading 25222000. The test of one particular consignment cannot be used to override the test conducted in respect of past consignments for deciding theclassification in respect of previous consignment test report of the same was not under dispute. Therefore, for this reason also the demand of duty amount, consequential penalty in respect of previous consignment is not sustainable on this ground also. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (9) TMI 116
  Sanction of scheme of arrangement - Sections 230 to 232 and other applicable provisions, if any, of the Companies Act 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved - Application allowed.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 144
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute between the parties prior to filing of the Application - HELD THAT:- From the perusal of the Legal Notice dated 26.10.2019 issued by the Respondent, it is clear that the Respondent had raised a dispute with regard to the payments made to the Appellant. Further, the Appellant also replied to the Legal Notice issued by the Respondent on 15.11.2019 denying the contents as made in the Legal Notice. The events are prior to issuance of Demand Notice dated 26.11.2019. Therefore, this Tribunal is of the Prima facie view that there exists dispute prior to issuance of Demand Notice. Therefore, having arrived at a finding that there exists prior dispute between the Appellant and the Respondent, this Tribunal is not traversing into the merits of the case and as such, there is no illegality in the Impugned Order passed by the Adjudicating Authority dated 04.03.2021. Appeal dismissed.

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• 2021 (9) TMI 143
  Jurisdiction - power of Adjudicating Authority to review its own Order - case of appellant is that Adjudicating Authority has traversed beyond its powers and jurisdiction by reviewing its own Order - HELD THAT:- The Ld. Adjudicating Authority was of the view that as per Section 3(23) of the IBC 2016 only a person as defined therein can approach the NCLT and an opportunity was given to the Sole Proprietor as a Petitioner/Applicant as the case may be to approach the Adjudicating Authority. The Adjudicating Authority also directed the Applicant therein to amend the cause title to cure the defect. Further, the Ld. Adjudicating Authority granted ten days time for compliance of the Order dated 25.02.2020 in view of the Pandemic due to Covid- 19. From the perusal of the Application it is seen that the Proprietorship name i.e., M/s. M2N Interiors is represented by its Sole Proprietor Mr. M. Murali as depicted in cause title, therefore, taking into consideration that the Proprietorship Firm represented by its Sole Proprietor by reflecting the name of sole proprietor itself would show that the Application is being represented by the Proprietorship Firm as well as the Proprietor, duly represented by its Sole Proprietor Mr. M. Murali. In this regard, as decided by this Tribunal Section 2 of I B Code 2016 applies to Partnership Firms and Proprietorship Firms. As per Sub Clause (f) of Section 2, the person defines in Sub Section 23 of Section 3 includes a Partnership Firm. This Tribunal is of the view that the Application filed by the Respondent i.e., M/s. M2N Interiors, a Proprietorship Firm is maintainable - appeal dismissed.

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• 2021 (9) TMI 117
  Direction to register a criminal complaint against the Respondent - offences committed under sections 191, 192, 193, 199, 200, 209 and 120-B of the Indian Penal Code - HELD THAT:- The Registry of this Tribunal has posted this Application for maintainability. From the relief portion as extracted supra, it is seen that the Applicant/RP has moved the present Application seeking to direct the Registrar of this Tribunal to register a criminal complaint against the Respondent for offences committed under sections 191, 192, 193, 199, 200, 209 and 120-B of the Indian Penal Code and also to hold a preliminary enquiry in relation to the same. It is seen that the present Application is filed under Section 70 and 72 of IBC, 2016 which falls under Chapter VII of IBC, 2016 which is termed as Offences and Penalties . A perusal of Section 236(1) of IBC, 2016 states that the offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. Further, section 236(2) states that the complainant in all such cases shall be the Insolvency and Bankruptcy Board of India (IBBI). Thus, in so far as Applications in relation to Chapter VII is concerned only the Special Court is having jurisdiction to try and hear the said Applications - the present Application filed by the Applicant is not maintainable - Application dismissed.

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• 2021 (9) TMI 115
  Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Despite all possible steps as required under the Code taken during the CIRP, the CoC did not receive any viable resolution plan/proposal for revival of the Company. The CoC in its wisdom has resolved with 91.04% voting share in favour of the liquidation of the Corporate Debtor as a going concern. The Applicant RP has given his consent to act as Liquidator. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, it has no option than to pass an order for liquidation of the Company in the manner laid down in Chapter III of the Code. The Corporate Debtor is ordered to be liquidated - application allowed.

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• Central Excise

• 2021 (9) TMI 154
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - error in the issuance of either of the two forms SVLDRS-2 or not - It is the case of the petitioners that in the proceeding before the Designated Committee (under the Scheme), respondent no.3 was a member and simultaneously, he was the Adjudicating Authority under the Act with respect to the Show Cause Notice dated 05.06.2015 (upon remand) - HELD THAT:- The Scheme does not contain any express provision to stay a pending adjudication proceeding, by way of a legal effect/fiction arising from any declaration filed thereunder. Second, neither the petitioners nor the revenue challenged the earlier order of the Tribunal dated 15.05.2019 and there was no specific stay order operating against the same, in any proceeding. The computation of the EAP under Litigation i.e. pending adjudication case category, would be substantially lower than that computed under the Arrears category. There is a complete absence of any statutory intent to allow for change of case category from Litigation to Arrears or to redetermine of the tax dues and EAP upon an adjudication order coming into existence during the pendency of proceedings under the Scheme. Therefore, once the petitioner had (rightly) filed the (first) declaration on 10.10.2019 under the case category Litigation , determination of the EAP amount would be governed accordingly. It cannot be changed, thereafter. In absence of any statutory risk to the adjudication proceedings being hit by any rule of limitation, those proceedings should necessarily have been kept in abeyance till the conclusion of the proceedings under the Scheme. We cannot contemplate, what useful purpose could be served by continuing and concluding the adjudication proceeding during the pendency of the proceedings arising upon filing of the (first) declaration on SVLDRS-1, under the Scheme, on 30.10.2019. In fact, by their conduct the authorities under the Act could not have defeated the object of an otherwise valid proceedings under the Scheme. In absence of any consequence of abatement etc. being prescribed either by the Scheme or the Rules, the time limit of sixty (60) days under section 127(4) (127(4) After hearing the declarant, a statement in electronic form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration.) of the Scheme is purely directory. The statutory authority/Designated Committee having failed to act within time contemplated under the Scheme, it cannot escape its obligation to issue the appropriate final demand of EAP on form SVLDRS-3. The Designated Committee also took on record written objections/arguments filed by the petitioners dated 09.12.2019 and 26.12.2019 and it also appears to have heard the matter at some length. However, it did not discharge its statutory obligation and it did not respond to the same as mandated under section 127(4) (127(4) After hearing the declarant, a statement in electronic form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration.) of the Scheme. Having failed to issue the revised EAP demand on form SVLDRS-3, the (first) declaration of SVLDRS-1 (filed by the petitioners on 30.10.2019) is still pending. Since, the matter is still pending before the Designated Committee, we are not required to answer the question of determination of the EAP, at this stage. The writ petition is allowed in part, with a direction upon the Designated Committee to necessarily consider the written objections/arguments filed by the petitioners dated 09.12.2019 and 26.12.2019, in response to the SVLDRS-2 dated 04.12.2019 and to issue the appropriate final demand of net EAP on form SVLDRS-3 to the petitioners within a period of thirty (30) days from the date of communication of this order.

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• 2021 (9) TMI 141
  Valuation - disallowance of deduction from assessable value - deduction on interest on receivables and collection charges on the delay in payment for each invoice - period from 01.08.1990 to 31.12.1997 - section 4(1)(a) of the Excise Act - HELD THAT:- The Tribunal noticed that the only issue before it was whether deduction on interest on receivables and collection charges should be based on the delay in payment for each invoice without any fixed percentage (i.e. 9.5%) or it should be @9.5%. This was for the reason that the Deputy Commissioner had recorded categorical findings that interest on receivables and bank charges were inbuilt in the value of the goods and, therefore, deduction was to be allowed. The Tribunal accepted the claim of the assessee and held that deduction on interest on receivables and bank charges has to be given based on the delay in payment for each invoice without any fixed percentage. The Assistant Commissioner was required to take a decision after remand from Supreme Court and even though the Assistant Commissioner had earlier required the Superintendent to submit a Verification Report, but he completely failed to take this Verification Report into consideration while passing the order date 31.12.2014 - The Assistant Commissioner held that the appellant was not entitled to claim deduction on account of bank charges and in regard to interest on receivables , the Assistant Commissioner held that the appellant had not submitted any documentary evidence to substantiate its version that interest an account of delay in payment was included/inbuilt in the price charged for the goods at the time of clearance. The Tribunal noticed that the only issue before it was whether deduction on interest on receivables and collection charges should be based on the delay in payment for each invoice without any fixed percentage (i.e. 9.5%) or it should be @9.5%. This was for the reason that the Deputy Commissioner had recorded categorical findings that interest on receivables and bank charges were inbuilt in the value of the goods and, therefore, deduction was to be allowed. The Tribunal accepted the claim of the assessee and held that deduction on interest on receivables and bank charges has to be given based on the delay in payment for each invoice without any fixed percentage. The Tribunal clearly observed that there was no dispute about the admissibility of deduction of interest on receivables from the assessable value in the case of the appellant and in view of the decision of the Supreme Court, deduction of actual interest receivable in respect of each invoice has to be allowed. This order of the Tribunal, which squarely covers the controversy involved in this appeal, has attained finality as learned counsel for the appellant stated that no appeal was filed by the Department to assail this order of the Tribunal and this fact has not been refuted by the learned Authorized Representative of the Department. A Division Bench of the Tribunal in ROSMERTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CE ST, LTU DELHI [ 2019 (11) TMI 1573 - CESTAT CHANDIGARH] also had an occasion to examine this contention. It was held that when for a subsequent period in the own case of the appellant it was held that service tax cannot be levied, which order had attained finality, the Department cannot be permitted to take a stand in the pending appeal that service tax is leviable. The order passed by the Commissioner (Appeals) cannot be sustained for this reason also - Appeal allowed.

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• 2021 (9) TMI 134
  CENVAT Credit - inputs - Plates, channels, angels, beam and coil etc. which has been used in repair, maintenance of plant and machinery - extended period of limitation - suppression of facts or not - HELD THAT:- In the present case the major demand is covered under extended period for the period 2003-2004 to 2007-2008. The show cause notice was issued on 23.06.2008. In the nature of this case, no suppression of fact can be alleged against the appellant. This is a common issue among various industries and there are various cases were decided by the Hon ble High Court of Chhattisgarh, Gujarat and Allahabad etc. before that the matter was referred to the Larger Bench in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] . It is a settled law that when there is a dispute related to interpretation of law and the issue is common among various industries, the suppression cannot be alleged against the assessee. The demand for the extended period could not have been raised by the department, therefore, the demand for the extended period is set aside. Demand for normal period - HELD THAT:- Since, against the judgment of Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] the matter is pending before the Hon ble Supreme Court, in the interest of justice, the matter should be decided after the judgment of Supreme Court. The matter remanded to the adjudicating authority to decide the matter afresh after the judgment of Hon ble Supreme Court - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (9) TMI 157
  Creation of demand and recovery of amount - Resolution plan was accepted - HELD THAT:- Various questions are being framed for determination with the consent of the learned counsels for the parties:- (i) Whether the element of entry tax falls in the definition of the term Tax as contained in Annexure-1 of the Resolution Plan. If not, then its effect? (ii) Whether the definition of Court/Tribunal as a governmental authority would include Supreme Court and High Court? (iii) Whether the adjudicating authority or resolution professional is bound by the decision rendered under Article 226 of the Constitution of India and in proceeding under Article 136 and Article 141 of the Constitution of India? (iv) Whether the interim order granted by the Hon ble Supreme Court, which is in the nature of an undertaking will be taken to be covered in the Resolution Plan in view of the operation of Article 144 of the Constitution of India? (v) Whether the petitioner obtained the order from the adjudicating authority in contravention of Section 30 and Section 31 of the IBC Code, 2016 read with CIRP Regulations without disclosing in the Resolution Plan, the liability towards Entry tax when it was simultaneously contesting the proceedings before the Hon ble High Court in its writ jurisdiction and also did not move any application before the Hon ble High Court intimating the Hon ble High Court about appointment of the interim Resolution Professional? (vi) Whether on account of active concealment of facts the petitioner has disentitled itself in equity for any relief from this Hon ble Court and to maintain judicial discipline, conflicting orders by coordinate benches cannot be passed? (vii) Whether the amount of tax collected by the petitioner from their customers or end consumers is a tax which goes in the corpus of the petitioner or it is a delegated duty being discharged by the petitioner fulfilling the obligations of the State in the capacity of Trustee? (viii) Whether being in the position of Trustee and admittedly not in a position to restitute, the principles of unjust enrichment will come into play or not? (ix) Whether the power to tax being sovereign, any incidental law can take away the sovereign power of the State? (x) Whether statutory frame work under which tax was collected by the petitioner having pith and substance in List-Il of the VIIth Schedule to the Constitution of India, a law relating to insolvency, which is essentially a law under List-III of the VIIth Schedule to the Constitution of India can encroach the field occupied by a subject in List-II? (xi) Whether first charge as employed under Section 77 of U.P. VAT Act is relatable to the exercise of the sovereign power of the State or is it relatable to a common law of the term Charge employed under the statutory law. (xii) Whether Section 238 of IBC Code,2016 will have any consequences when it is pithily operating in a different field and will not override the provisions of the VAT Act or U.P. Tax on Entry of Goods Act, 2007 or Central Sales Tax Act, 1956? (xiii) Whether the date of taxable event will be relevant consideration or the date of assessment/demand will be relevant consideration for the effective date under the resolution plan as per the provision of U.P. VAT Act or U.P. Tax on Entry of Goods Act,2007? (xiv) Whether controversy involved in these writ petitions is concluded by the judgement of Hon ble Supreme Court in Ghanshyam Mishra and sons Pvt. Ltd. vs. Edelweiss Asset Reconstructions Company Ltd., [2021 (4) TMI 613 - SUPREME COURT] ? (xv) Whether in view of Section 31 of the Insolvency and Bankruptcy Code, 2016 ( Code ) (as amended till date), the terms of the Resolution Plan once approved by the NCLT, is binding on all creditors of the Petitioner, including the Respondents? (xvi) Whether in view of Section 238 of the Code, the provisions of the Code have an overriding effect on the claims of creditors of the Petitioner, including the Respondents? 6. Put up for further hearing along with all connected writ petitions, on 03.09.2021 at 2 P.M.

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• 2021 (9) TMI 152
  Maintainability of petition - petition dismissed solely on the ground that the assessee should avail the alternate remedy provided under the provisions of the Tamil Nadu Value Added Tax Act, 2006 - ex-patre order - opportunity of hearing provided or not - HELD THAT:- The assessment orders as well as the order dated 19.9.2018 rejecting the said representation 28.11.2017 by treating the same as a petition under Section 84 of the Act were the subject matter of challenge in the said writ petitions and at the time of entertaining the said writ petitions, an order of interim stay was granted. The respondent filed a counter affidavit touching upon the merits of the matter. However, the learned Single Judge dismissed the said writ petitions solely on the ground of availability of an alternate remedy and that the Writ Court should not exercise powers under Article 226 of The Constitution of India assailing the orders passed by the Statutory Authorities, which were not appealed against within the maximum period of limitation prescribed before the concerned Appellate Authority. Admittedly, the assessments from the year 2007-08 to 2012- 13 were sought to be reopened and the entire reopening was on account of an inspection conducted by the respondent Assessing Officer on 23.11.2015. Therefore, it cannot be stated that the appellant was deliberately avoiding to submit the documents. But, the Court can perceive the difficulties since the transactions were dated back as early as 2007 and there might have been difficulty in getting the documents and more particularly when the appellant is a Central Government Organization. Hence, the reasonable approach that should have been adopted by the respondent Assessing Officer is to afford an opportunity to the appellant when they submitted their representation dated 28.11.2017 especially when the respondent Assessing Officer thought fit to treat the same as a petition under Section 84 of the Act. Though the assessment orders were passed in the year 2017, they remain as paper orders and no tax was able to be recovered as they were stayed for all these years - the matters are remanded to the respondent for a fresh consideration - petition allowed by way of remand.

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• Indian Laws

• 2021 (9) TMI 150
  Seeking grant of bail - Smuggling - 159 grams of MDMA of commercial quantity - contraband from foreign countries - seizure u/s 67 of the NDPS Act - twin requirements under Section 37(1)(b) of the NDPS Act or not - HELD THAT:- Admittedly, the consignment was addressed to Amitha Radhakrishnan and not to the petitioner. Even the earlier parcel referred to by the prosecution which was said to have contained 25 grams of ganja, was also addressed to Amitha Radhakrishnan. It is stated that Amitha Radhakrishnan and the petitioner were in live-in relationship residing in the address mentioned in the parcel. It is stated that Amitha Radhakrishnan has given a statement that she was not aware of the bad deals that are being held by the petitioner, but, however, she says that it must be the petitioner who used to book the consignment in her name and used to manage her bank accounts. In the present case, the prosecition has placed sufficient materials to show that the commercial quantity of contraband i.e., MDMS was seized from the parcel that was lying in the foreign post office. The prosecution is relying on the statements of the petitioner and Amitha Radhakrishnan to establish the link between the petitioner and the offence in question - the materials that are placed before the Court are not sufficient to convict the petitioner or to hold him guilty. It is not the contention of the prosecution that the petitioner is having any criminal antecedents. Therefore, it can be held at this stage that he is not likely to commit any offence, if he is enlarged on bail. This Court is conscious of the fact that, it is not the stage either to declare the petitioner as innocent or guilty for the offences as alleged. At the initial stage of considering the bail application filed by the petitioner, prima facie satisfaction about the materials placed on record is to be looked into and on consideration of such materials, in light of the rival contentions, there are reasonable grounds for believing that the petitioner is not guilty of such offences and that he is not likely to commit any offence, while on bail. When these twin conditions as under Section 37(1)(b) of the NDPS Act are satisfied, there are no reason to reject the prayer made by the petitioner. The petitioner is entitled to be enlarged on bail subject to conditions, which will take care of the apprehension expressed by the learned CGSC that the petitioner may abscond, he may commit similar offences or may tamper or threaten the prosecution witnesses - Petition allowed.

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• 2021 (9) TMI 149
  Dishonor of Cheque - 15% of the cheque amount is to be paid by the complainant to the Himachal Pradesh State Legal Services Authority - parties prays that the matter be compounded in terms of the judgment passed by the Hon ble Supreme Court of India in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] - HELD THAT:- The jurisprudence behind the N.I. Act is that the business transactions are honoured. The legislative intention is not to send the people to suffer incarceration because their cheque was bounced. These proceedings are simply to execute the recovery of cheque amount by showing teeth of penalty loss - This Court has inherent powers under Section 482 of the Code of Criminal Procedure which are further supported by Section 147 of the N.I. Act to interfere in this kind of matter where parties have paid the entire money and where the complainant does not object to clear all the proceedings. The continuation of these proceedings will not suffice any fruitful purpose whatsoever - in view of the compromise, this is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, is invoked to compound the offence. The petitioner-accused shall deposit the aforesaid 15% of the cheque amount before the Himachal Pradesh State Legal Services Authority, on or before 10.11.2021. The amount deposited before the trial court shall be released to the complainant, on furnishing bank account number - petition disposed off.

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• 2021 (9) TMI 148
  Dishonor of cheque - insufficiency of funds - maintainability of complaint against the proprietor without impleading the bar and restaurant as accused No. 1 (i.e. proprietorship concern) - legality of acquittal order passed - Allegation that cheque was stolen and misused - HELD THAT:- The respondent is a proprietor of Manjunatha Bar and Restaurant. The complaint can be filed against the individual name of the proprietor Govindaraju or the name of the concern namely, Manjunatha Bar and Restaurant. Merely, because the complainant has not mentioned that it is a proprietorship concern represented by the proprietor Govindaraju, that itself is not a ground to say that the complaint against the respondent is not maintainable in view of Section 141 of N.I. Act. Section 141 of N.I. Act is not applicable in the case of proprietorship. The complaint can be filed against the name of the proprietor or the proprietorship concern. Mere non-mentioning the name of the accused as representative of the proprietary concern or proprietor, it cannot be said that the complaint is not maintainable. On the other hand, the complaint is maintainable against the name of the proprietor/proprietorship concern - the contention of learned counsel for the respondent is not acceptable. Cheque was stolen and misused or not - HELD THAT:- The respondent filed a private complaint before the Court and the matter was referred to the Police as per Ex. D.1, FIR has been registered as against the husband of the complainant and Kempegowda, but the Police filed B Final report. The same was not challenged by the accused and the complaint filed by the accused came to be closed. But there is no evidence adduced by examining any other person or by producing any document to show that Kempegowda was working in his Bar and Restaurant. Therefore, the contention that the cheque was stolen by Kempegowda and it was misused by the husband of the complainant is not acceptable. Capacity of the complainant wherein the complainant examined herself - HELD THAT:- Though the respondent also produced the passbook showing that the cheque was given to Kempegowda, which was issued by him on 04.11.2019, but the said entries were made on the last page of the notebook. On perusal of the entire notebook, the name of Kempegowda is no where found and no where it was mentioned that the said Kempegowda used to receive the cheque by signing in the notebook, but the accused might have created the document for the purpose of showing that the cheque was given to Kempegowda by making the entry in the last page of the notebook, which cannot be accepted. Even otherwise, the same was not marked. Therefore, the notebook cannot be considered as evidence. Rebuttal of presumption under Section 139 of the N.I. Act - HELD THAT:- The contention raised by the respondent-accused that she had no capacity to pay the loan of Rs. 2.00 Lakhs to the accused cannot be acceptable. Another contention raised by the respondent is that the complainant has not examined her husband, who is the friend of the accused - HELD THAT:- Merely her husband was not examined before the Court, that itself is not the ground to suspect the capacity of the complainant. Drawing presumption under Sections 118 and 139 of the N.I. Act is available in favour of the complainant where she has to discharge her initial burden that the accused received loan and in respect of repayment of loan, he has issued the cheque, which came to be dishonoured. The complainant is successful in proving the guilt of the accused and the legally liable debt to be recovered from the respondent-accused and the accused issued the cheque which came to be dishonoured and is liable to be punished under Section 138 of N.I. Act - the presumption is rebutted by the accused and came to a wrong conclusion and acquitted the accused, which is erroneous. Appeal allowed.

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• 2021 (9) TMI 147
  Dishonor of Cheque - void contract in terms of section 56 of the Contract Act - waiver of rent due to unforeseen circumstances - adjudication of same matter of trial u/s 482 of Cr.P.C. - situation during the outbreak of the COVID-19 Pandemic - HELD THAT:- A perusal of the complaint filed by the respondents reveals that the cheque in question was issued by the petitioners in discharge of their liability that accrued in terms of the licence deed placed on record by the respondents before the trial court and the learned trial court after satisfying itself that the complaint fulfills the requirements of sections 138 and 142 of the Act, issued the process against the petitioners vide order dated 12.01.2021. A perusal of the licence deed reveals that there is no stipulation in the licence deed that provided for waiver of the rent in view of the un-foreseen event resulting into the cessation of the business. Be that as it may, without commenting upon the merits of the case, the grounds urged by the petitioners, whether they have any substance or not, can at the most amount to defense of the petitioners that the petitioners can raise before the trial court during the trial - there is no legal infirmity either in the complaints filed by the respondents or in the order by virtue of which the process has been issued by the trial Court. Petition dismissed.

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• 2021 (9) TMI 146
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - issuance of cheque for discharging his legally liable debt, is proved or not - HELD THAT:- Of course, the documents are required to be proved by the complainant if it is disputed. But Exs. P. 8 and 11 are the public documents issued by the Public Authority, the post master who is the Central Government employee. He has no personal intention. He need not be examined in all the cases to prove the delivery of the registered post. Therefore the contention taken by the accused and also the findings of the trial Court reveals that the legal notice not served and non-examination of post master is fatal and requires to be set aside - the complainant has successfully proved that the notice has been duly served on the accused. Even as per Section 27 of the General Clauses Act, 1897 when the Article sent to the complainant to the correct address, it is deemed to be served. Therefore, the findings of the trial Court is not sustainable holding that the notice was not served to the accused. The cheque as well as the signature of the accused is not in dispute. The accused also questioned the capacity of the complainant but the complainant has stated that he is running the business relating to power loom and there is a business contract between them. He used to sell raw silk material to the accused and in this business connection, he has paid money to the accused and in discharging of the loan, the accused has issued a cheque and the same was dishonored. There is nothing to disbelieve the evidence of the complainant and the presumption under Section 139 of Negotiable Instruments Act is available in favour of the complainant and the same was not rebutted by the accused except taking contention that the notice has not been served. The accused account is at Vijaya Bank and the accused Bank has given endorsement of memo directly to the Manager of the complainant s Bank i.e., Karur Vysya Bank for dishonor of cheque due to insufficient funds. Therefore, the Karur Vysya Bank has given the said endorsement to the complainant for having dishonored the cheque. Therefore, there is no need for the complainant Bank to issue one more memo for dishonor of the cheque presented by the complainant. The Bank memo or letter issued by the Vijaya Bank of the accused is sufficient to show that the cheque has been dishonored for the reason insufficient funds . Therefore, the trial Court has committed error in disbelieving the case of the complainant and acquitting the accused is erroneous. The judgment of the trial Court for having acquitting the accused for the offence punishable under Section 138 of N.I. Act is hereby set aside. The accused is found guilty and convicted - Appeal allowed.

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• 2021 (9) TMI 145
  Dishonor of cheque - insufficiency of funds - during the pendency of the complaint, an application under Order VI Rule 17 CPC was filed for amendment in the complaint on the ground that by mistake cheque No. 628895 has been wrongly mentioned as 628892 - HELD THAT:- The undisputed fact is that alongwith the complaint, the respondent has filed the cheque No. 628895. Even in the statutory notice the cheque number was mentioned as 628895, however, in the complaint, the cheque number was mentioned as 628892. In the present case, the respondent/complainant has filed the cheque No. 628895. The statutory notice was also issued in respect of cheque No. 628895, however, by mistake it appears that in the complaint cheque number was mentioned as 628892. Under these circumstances, this Court is of the considered opinion that the mistake is a simple infirmity, which is curable by means of a formal amendment, and by allowing such an amendment, no prejudice would be caused to the applicant, as he was served with a statutory notice giving the correct cheque number, i.e. 628895. If a notice is given on the basis of incorrect cheque number, then the entire foundation will fall and the complainant cannot maintain his complaint on the basis of incorrect cheque number. However, in the present case, it is not the case of the applicant that the statutory notice was issued to him by mentioning incorrect cheque number. The Magistrate in its order has also mentioned that the cheque number mentioned in the cheque, written memo and statutory notice is 628895, whereas only in the complaint the cheque number has been mentioned as 628892, therefore, it is a formal infirmity. Since the defect was a formal in nature without affecting the maintainability of the complaint, therefore, this Court is of the considered opinion that no jurisdictional error was committed by the Courts below by allowing the application filed under Order VI Rule 17 CPC. Application dismissed.

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