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2022 (9) TMI 1581 - RAJASTHAN HIGH COURT
Restoration of mining operation and business of the petitioner by issuing e-ravanna - refrain from creating any hindrance or obstruction in the mining operation - no prior notice before inspection was given - HELD THAT:- Submission of the learned senior counsel for the petitioner that entire exercise undertaken by the respondents is bad in law inasmuch as no prior notice before inspection was given to it, does not merit acceptance as this Court is not satisfied that before carrying out inspection of the petitioner's mine, any prior notice was required. In absence of any statutory provision under the Rules of 2017 mandating so, the respondents were at liberty to carry out surprise inspection.
This Court is also not satisfied that no demand could have been based on the inspections carried out in absence of authorised representative of the petitioner firm inasmuch as the inspection on both the occasions was carried out in presence of Shri Anil Parashar, who, undoubtedly, was a representative of the petitioner as is revealed from the supplementary agreement dated 24.1.2019 executed between the parties wherein, Shri Parashar has stood as a witness on behalf of the petitioner-firm as also from the fact that the documents obtained by Shri Anil Parashar under the RTI Act, 2005, have been relied upon by the petitioner firm to substantiate the averments made in the writ petition. Therefore, this Court has no hesitation in holding that inspections were carried out in presence of representative of the petitioner firm.
This Court is not satisfied with the contention of learned State Counsel that since the demand raised vide order dated 11.8.2020 was maintained vide order dated 30.12.2021, they were required neither to supply a copy of the inspection report dated 9.4.2021 to the petitioner firm nor, to issue any show cause notice or afford it an opportunity of hearing before passing the order dated 30.12.2021. This specious argument is rather reflective of pre-determination of the respondents in maintaining the penalty imposed vide order dated 11.8.2020 - in the considered opinion of this Court, the respondents were under an obligation not only to supply the petitioner a copy of the inspection report dated 9.4.2021; but, also to afford it an opportunity of hearing before passing the order dated 30.12.2021.
The order dated 30.12.2021 as also the order dated 11.8.2020 are quashed and set aside - Petition allowed.
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2022 (9) TMI 1580 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Eligibility to be a resolution applicant in view of Section 29A(f) of the Insolvency and Bankruptcy Code, 2016 - proceedings under Section 29-A(f) of the Code has been carried out against the Appellant on the basis of notice of BSE dated 28.03.2018 - falls under the scope of Section 11(4) of the SEBI Act, 1992 - opportunity of hearing not provided - violation of principle of natural justice (Audi alterm partem) and is also violation of Section 11(4) of the SEBI Act, 1992.
HELD THAT:- Section 29(A)(f) of the Code provides that “A person not eligible to be resolution applicant: (f) is prohibited by the securities and exchange board of India from trading in securities or accessing the securities markets.” The Appellant in this case has been categorically debarred for the reasons that it failed to comply with the mandatory direction issued by the SEBI in the circular dated 10.10.2016 and 01.08.2017 by which the Appellant was repeatedly cautioned that in case, one of the option is not exercised within the time line prescribed, the necessary action shall be taken as prescribed in clause 6 of the circular dated 10.10.2016.
The argument of Counsel for the Appellant not impressed upon that the SEBI was required to follow the provisions of Section 11(4) of the Act before initiating the action in terms of circular dated 10.10.2016 and 01.08.2017 as the said action has been taken in terms of Section 11(1) of the Act.
Reference could be had to be the decision of the Hon’ble Supreme Court in the case of Sahara India Real Estate Corporation Limited & Ors. [2012 (9) TMI 374 - SUPREME COURT] in which it was held that sub-section (2) is subservient to sub-section (1) of section 11. Therefore both sub-sections (2A) and (4) will inferentially be subservient to sub-section (1) of section 11 of the SEBI Act. Therefore, the obligation cast on SEBI, to protect the interest of investors in securities, to promote the development of the securities market, and to regulate the securities market " by such measure as it thinks fit", remains undiluted even by subsections (2A) and (4) of Section 11 of the SEBI Act.
Counsel for the Appellant has submitted that there is no delegation of power by SEBI to BSE which is required to be done in accordance with Section 19 of the Act but in this case, it is opined that BSE has passed on the information to the Appellant by the impugned notice that it had been declared as non-compliant of Section 29(A) (f) of the Code in view of its act and conduct considered by the SEBI in pursuance of the circulars dated 10.10.2016 and 01.08.2017 and has exercised power under Section 11(1) of the Act. It is also a fact that the Appellant had admitted that it is barred in the list of BSE from accessing the security market for 10 years and when the resolution plan was submitted on 28.01.2019 and the Appellant was ineligible in view of Section 29(A) (f) of the Code.
The impugned order does not require any interference as there is no merit in these appeals and hence, the same are hereby dismissed.
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2022 (9) TMI 1579 - SC ORDER
Time limitation of proceedings as financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 - calculation of time period - HELD THAT:- The company had paid a sum of Rs.49,50,000/- on 19.12.2016, amounting to acknowledgment of debt - the period of three years has to be calculated from the said date.
Reliance is placed on a Judgment of this Court in SESH NATH SINGH & ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [2021 (3) TMI 1183 - SUPREME COURT], wherein this Court has held We see no reason why Section 14 or 18 of the Limitation Act,1963 should not apply to proceeding under Section 7 or Section 9 of the IBC. Of course, Section 18 of the Limitation Act is not attracted in this case, since the impugned order of the NCLAT does not proceed on the basis of any acknowledgment.
The order passed by the National Company Law Appellate Tribunal is clearly erroneous in law. The same is set aside and the order of the National Company Law Tribunal dated 27.08.2019 is restored. The appeal is, accordingly, allowed.
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2022 (9) TMI 1578 - CESTAT HYDERABAD
Denial of CENVAT Credit - input services - insurance services under group Medishield policies and personal accident policies provided to its employees and their families - period January, 2006 to July, 2007 - penalty u/s 78 of FA - HELD THAT:- The service on which Cenvat credit is admissible must fall in the same category as the listed services. Medical insurance does not fall in that list and is also not similar to the services indicated in that list. Therefore, the appellant is not entitled to Cenvat credit. He relies on the judgment of the Hon’ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II VERSUS M/S CADILA HEALTH CARE LTD. [2013 (1) TMI 304 - GUJARAT HIGH COURT].
The issue of Cenvat credit on insurance services provided to the employees has been dealt with by the Larger Bench of this Tribunal in the case of M/S. RELIANCE INDUSTRIES LTD., VADODRA VERSUS COMMISSIONER CENTRAL EXCISE & SERVICE TAX (LTU) , MUMBAI [2022 (4) TMI 1357 - CESTAT MUMBAI (LB)] and it has been held that Cenvat credit is available on the service tax paid on such premium. Reliance Industries Ltd dealt with the question whether such premium was paid for insurance of not the employees but those who have opted for voluntary separation scheme announced by the company. In other words, the persons who would benefit from this insurance premium will cease to be employees of the company in that case. In the present case, the claim of the appellant is on a much better footing, inasmuch as the premium in this case is paid for medical insurance of its own employees and their families.
The impugned order cannot be sustained and needs to be set aside - Appeal allowed.
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2022 (9) TMI 1577 - ITAT MUMBAI
Disallowance of interest expenditure attributable to earning of exempt income - HELD THAT:- Respectfully following the decision in assessee’s own case for the A.Y. 1997-98.we allow ground raised by the assessee wherein as held Commissioner (Appeals) has recorded a categorical factual finding that the interest bearing funds have no nexus with the investment made in tax free bonds. Further, he has also recorded a finding of fact that the assessee had sufficient own fund to make investment in tax free bonds. The aforesaid factual finding of the first appellate authority has not been controverted by the Revenue through any substantive evidence brought on record.- Decided against revenue.
Nature of expenses - Expenditure on refurbishment of premises and software - AR submitted that the bank incurred expenditure towards electrical fittings, false ceiling, interiors, temporary fittings, paintings wooden partition, flooring etc. and it is essential for the Bank to incur such expenses for proper ambience as it is in a customer centric industry - HELD THAT:- We observed that Hon'ble Supreme Court in the case of Madras Auto Services Pvt. Ltd. [1998 (8) TMI 1 - SUPREME COURT] on similar issue adjudicated in favour of the assessee as held looked upon expenditure which did bring about some kind of an enduring benefit to the company as a revenue expenditure when the expenditure did not bring into existence any capital asset for the company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount.
In all these cases, the expense has been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. In the present case also, since the asset created by spending the said amounts did not belong to the assessee but t he assessee got the business advantage of using modern premises at a low rent, thus saving considerable revenue expenditure for the next 39 years, both the Tribunal as well as the High Court have rightly come to the conclusion that the expenditure should be looked upon as revenue expenditure.- Decided against revenue.
Taxability u/s. 115JA - Assessee is not constituted as a company under the Companies Act - HELD THAT:- As we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 1997-98 and decided the issue in favour of the assessee wherein as held since the assessee is not constituted as a company under the Companies Act, 1956, the provisions of section 115JA of the Act cannot be applied. While doing so, the Bench further observed that since the assessee Corporation is not required to distribute any dividend, it cannot be considered to be a company under the Companies Act, 1956. The facts involved in assessee’s case are more or less identical to the facts of MSEB [2001 (8) TMI 310 - ITAT MUMBAI]. In view of the aforesaid, we hold that the provisions of section 115JA of the Act are not applicable to the assessee. - Decided against revenue.
Denial for deduction of head office expenditure in entirety - restricting the claim u/s. 44C - AR submitted that Deduction of Head Office expenses should be allowed in entirety as per Non Discrimination Article 26 of Tax Treaty between India and UK and not restricting the claim u/s. 44C - AR submitted that discriminatory provisions have to be ignored for foreign/non-resident assessee in view of Tax Treaty - HELD THAT:- We observe that Coordinate Bench in the case of Metchem Canada Inc., [2005 (9) TMI 227 - ITAT BOMBAY-F] considered the similar issue and adjudicated in favour of the assessee as held beyond dispute, only such expenses are to be allowed as a deduction on account of head office expenses as can be fairly allocated to the PE. The only impact of the applicability of non-discrimination clause will be that the scope of deduction under Section 37(1) will not stand curtailed by the restriction placed under Section 44C of the Act. Section 44C has no application in the matter and that the assessee is to be allowed deduction of such head office expenses as can be fairly allocated to the PE. - Decided against revenue.
Non taxability of interest on income tax refund - HELD THAT:- As decided in the case of Avada Trading [2006 (1) TMI 465 - ITAT MUMBAI] any income assessed may become non-taxable by virtue of retrospective amendment and consequently, erroneous assessment can be rectified. Therefore, in our humble opinion, if the interest granted under Section 244A(1) is varied under Sub-section (3) of such section, then the interest originally granted would be substituted by the reduced/increased amount as the case may be -Interest on refund under Section 244A(1) would be assessable in the year in which it is granted and not in the year in which proceedings under Section 143(1)(a) attain finality.
Interest on tax refund be taxed at 10% as per India-UK Treaty - HELD THAT:- As decided in Credit Agricole Indosuez [2015 (6) TMI 974 - BOMBAY HIGH COURT] no fault can be found with the impugned order of the Tribunal in restoring the issue to the Assessing officer to determine / adopt the rate of tax on refund in the light of the relevant clauses of Indo-France DTAA and the decision of Special Bench in Clough Engineering [2011 (5) TMI 562 - ITAT, DELHI].
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2022 (9) TMI 1576 - MADRAS HIGH COURT
Nature of expenditure - Commission paid to the Managing Director - appellant company is following mercantile system of accounting and such method of accounting has been accepted by the department in all the other years - Tribunal held that the expenditure incurred can be treated as Revenue expenditure and not as capital expenditure
HELD THAT:- On a careful perusal of the order of the Assessment Officer, we are of the view that the methodology adopted by the Revenue is perfectly correct for the simple reason that it is not disputed that the amount has been shown as expenditure and that the payment has been made to the Managing Director. However, the amount has been received by the beneficiary only for the subsequent Assessment Year, which does not mean that as long as the Appellant has not shown the payment in the Books of Accounts in respect of liability, it cannot be stated that the expenditure was incurred during 2004-2005 as such expenditure would be ratified only after Board's meeting.
We have no other option, but to dismiss this Appeal. Accordingly, this Tax Case Appeal is dismissed and the question of law answered against the Assessee and in favour of the Revenue.
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2022 (9) TMI 1575 - CESTAT NEW DELHI
Condonation for delay of four years and nineteen days in filing the appeal - Department failed to provide Proper and satisfactory explanation for the delay - HELD THAT:- In the present case, it has been seen as a fact that as far back as on May 18, 2018, the department was aware that the appeal filed by the department had been returned because of defects and even the letter dated December 07, 2020 sent by the Department to the Tribunal also takes note of the fact that the Department had also been verbally informed that the appeal papers had been returned. Yet the Department sent letters dated November 23, 2020 and September 14, 2021 to the Tribunal seeking status of the appeal which had already been returned back to the Department. This only reflects the casual attitude adopted by the Department, more particularly when the time limit of filing an appeal is three months. A proper and satisfactory explanation was required to be given for explaining the delay of four years and nineteen days in filing the appeal but despite having been granted an opportunity to file a better application to explain the delay, the Department has not been able to explain the enormous delay to the satisfaction of the Bench.
The inevitable conclusion that flows from the aforesaid facts is that the Department was highly negligent in filing the appeal on February 10, 2022 to assail the order dated October 06, 2017 when the Department had, for the first time acquired knowledge on May 18, 2018 that the appeal had been returned to the Department by the Tribunal because despite three notices sent by the Tribunal, the defects had not been removed. Subsequently, even the letter dated December 17, 2020 sent by the Department to the Registry of the Tribunal admits that on verbal enquiry, the Department had been informed that the appeal papers had been returned. No cogent or plausible reason has been given by the Department for explaining this enormous delay except stating that it had written two letters to the Tribunal on November 23, 2020 and September 14, 2021 seeking status of the appeals filed by them before the Tribunal on January 18, 2018 when in fact, they were aware that the appeal had been returned by the Tribunal by letter dated May 08, 2018, which letter they had received on May 18, 2018.
The application filed for condonation for delay, therefore, deserves to be rejected and is rejected. This would result in the dismissal of the appeal also as it was not filed in the statutory period provided under the Act.
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2022 (9) TMI 1574 - ALLAHABAD HIGH COURT
Maintainability of petition - availability of alternative statutory remedy by filing appeal - respondent nos. 2 and 3 submitted that he has not been provided the copy of writ petition but he has been told that by means of this petition the order of Tribunal has been assailed, therefore, this petition is not maintainable - HELD THAT:- There are substance in the submission of respondent nos. 2 and 3, therefore, assailing the order of Tribunal may not be maintainable.
This petition is dismissed being not maintainable - However, the liberty is given to the petitioner to file an appeal u/s 35 G of Central Excise Act, 1944.
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2022 (9) TMI 1573 - DELHI HIGH COURT
Reopening of assessment u/s 148A - Assessee-Company had taken entries from twenty-eight bogus entities maintained by one accommodation entry provider - Petitioner contends that there has been violation of principles of natural justice as the Petitioner has been denied an effective opportunity to rebut the information available with the Asseesing Offcer - HELD THAT:- This Court has consistently observed that to give effect to the objective of the scheme of Section 148A, AO must provide specific material and information to the Assessee in the notice issued u/s 148A(b) so that the Assessee can provide a meaningful response at the stage of inquiry u/s 148A proceedings.
Consequently, as the show cause notice issued u/s 148A(b) of the Act as well as the subsequent notice are bereft of any details, this Court is of the view that the Revenue by asking the Petitioner-Assessee to respond to the aforesaid vague show cause notice was virtually asking the Petitioner to search for ‘a needle in a haystack’.
As Revenue now states that the Respondent shall supply all the relevant material documents and information in its possession, the impugned order passed u/s 149A(d) as well as the notice issued u/s 148 are set aside with a direction to Revenue to issue a supplementary notice in pursuance to the initial notice issued u/s 148A(b) within three weeks enclosing all the relevant/incriminating information/material/documents. AO is directed to pass a fresh order under Section 148A(d) in accordance with law within six weeks thereafter.
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2022 (9) TMI 1572 - ITAT DELHI
Accrual of income in India or not - Fee received by the assessee under the Centralized Services Agreement - whether FIS either under Article 12(4)(a) or 12(4)(b) of the India–US Tax Treaty - HELD THAT:- We find force in the contention of the Counsel because identical grievance have been heard and decided by this Tribunal [2022 (7) TMI 781 - ITAT DELHI] in favour of the assessee and against the revenue wherein as held Centralized Service fee received by the assessee cannot be treated as FIS u/article 12(4)(a) OR 12(4)(b) of India- us DTAA due to failure of 'make available' condition, has made an unsuccessful attempt to bring it within the ambit of Article 12(4)(a) of the treaty - Decided in favour of assessee.
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2022 (9) TMI 1571 - ITAT RAIPUR
Addition u/s 68 - unexplained cash credit - genuineness of the transaction not proved - source of source unexplained - HELD THAT:- When the assessee had discharged the primary onus that was cast upon it by placing on record supporting documentary evidence to substantiate the genuineness and veracity of the transaction of having received share capital and premium from the aforesaid share subscriber i.e. M/s. Lovely Suppliers Pvt. Ltd., therefore, the onus was shifted upon the A.O to prove otherwise. It was further noticed that as the share subscriber company was duly registered with ROC and was having registered offices a/w. registration number, and the fact that the payment towards share capital and share premium was received through banking channels, therefore, the genuineness of the transaction could not be doubted in absence of any material placed on record which would prove to the contrary.
Source of source - Source out of which the share subscriber company i.e. M/s. Lovely Suppliers Pvt. Ltd. (supra) had made the payment towards share capital and share premium to the assesee company, it was observed by the CIT(Appeals) that the aforesaid share subscriber had during the year under consideration sold its investments and in lieu thereof was in receipt of money from various other companies.
As rightly concluded by the CIT(Appeals) that as the assessee by placing on record substantial documentary evidence had proved to the hilt the genuineness of the transaction, therefore, the A.O without carrying out any enquiry could not have justifiably drawn adverse inferences as regards the authenticity of the transaction in question. Accordingly, drawing support from the judgement of CIT Vs. Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SC ORDER] and Venkateshwar Ispat (P) Ltd. [2009 (5) TMI 290 - CHHATTISGARH HIGH COURT], it was observed by the CIT(Appeals) that now when the investment made by the share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. was duly reflected in the latter’s audited financial statement for the year under consideration, therefore, there was no justification on the part of the A.O in dislodging the claim of the assessee of having raised genuine amount of share capital and share premium from the aforesaid party without placing on record any material which would prove otherwise -CIT(Appeals) had rightly vacated the addition made by the A.O u/s.68 - Decided in favour of assessee.
Disallowance u/s.14A r.w.r. 8D(2)(iii) - no exempt income earned - HELD THAT:- When the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition - Decided in favour of assessee.
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2022 (9) TMI 1570 - ITAT MUMBAI
Exemption u/s 10(23C) (iv) - Charitable activity u/s 2(15) or not? - Assessment of trust - as per AO receipts from the issuance of certificate of origin be treated as trade, commerce or business - CIT(E) held that assessee is not involved in charitable activities as required by the provisions of section 10(23C)(iv), hence the application filed by the assessee is not fit case of grant of approval - HELD THAT:- Assessee collects fees from members/non-members within the limit prescribed by the DGFT i.e., not more than ₹.100/-.
Whether the assessee charges fees for issuing certification is for making profit? - whether the fees collected by the assessee are more than other trade bodies, can this be treated as motive for making profit? - In our considered view assessee has liberty to charge fees for issuing certification within the limit fixed by the DGFT, just because other trade bodies are charging less than the fees collected by the assessee, it does not lead to presumption that assessee might have earned excess profit, it depends upon the setup and their broad objects.
We observe that in similar fact on record the Hon'ble Supreme Court reviewed the similar issue in ACIT v. Surat Art Silk Cloth Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT] decided the issue on applicability of the section 2(15) of the Act in favour of the assessee and against the revenue.
Thus what is relevant is it is not important how the assessee has charged the fees to the members or non-members, it is relevant to analyse whether these activities are carried with the sole object of making profit or mere these activities are carried to support its objects of charity. Further, it is also relevant that whether these surplus funds earned from these activities are applied for the object of the trust. In the given case there is no finding from the tax authorities that the assessee has not applied for the object of the trust nor it has reported any misuse of the funds of the trust. we further observed that the CIT(E) equated the formal education and the indirect education.
The assessee conducts seminars, training courses and commercial examinations for the benefit of its members, it need not be a formal education to be considered as the charitable activity. The courts have held that offering education through formal or informal are part of charitable activities.
CIT(E) rejected the application with the observation that in the assessment proceedings in the A.Y. 2010-11 the Ld. AR of the assessee prayed before the AO to exclude the receipts received from non-members as part of profit which should be excluded for the purpose of applying concept of mutuality. In our considered view this is only a proposition submitted during the assessment proceedings only in order to address the proposal to assess the income under concept of mutuality. It does not mean that the assessee is carrying this activity to earn profit or it does not propose the fact that the activities are carried only with the object of making profit.
Therefore in our considered view the assessee is eligible for registration u/s. 10(23C)(iv) of the Act since at the time of registration, the CIT(E) is expected to verify the objects for granting registration we observe that the revenue has already granted registration u/s. 12A of the Act. The evaluation process for registration u/s. 12A and u/s. 10(23C)(iv) of the Act are exactly similar, once the 12A registration is granted after due process of verification, we do not see any reason not to grant registration u/s. 10(23C)(iv) of the Act. Grounds raised by the assessee are allowed.
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2022 (9) TMI 1569 - ITAT KOLKATA
Correct head of income - income earned by the assessee on share/mutual funds transactions - volume of transaction - HELD THAT:- We note that assessee has purchased the shares on delivery basis. Though the volume of transactions is high and certain borrowed funds have also been deployed but considering the judicial precedents referred above including that of Hon’ble jurisdictional High Court carrying force of binding nature, we have no hesitation in holding that mere volume of transactions and utilization of borrowed funds are not the criterion to alter the treatment given by the assessee about her investment in the books.
Therefore, along with the CBDT circulars, we allow the appeal of the assessee and direct the AO to treat the income earned by the assessee on share/mutual funds transactions under the head capital gains by considering the assessee as an investor, whether short-term or long-term capital gains, depending upon the period of holdings of the relevant shares/mutual fund units. In the result, grounds taken on this issue by the assessee are allowed and those by the revenue are dismissed.
Disallowance u/s 14A - assessee submitted that it should be restricted to the extent of considering only those investments which yielded exempt income for which a detailed working is placed on record - HELD THAT:- We find it proper to remit the matter back to the file of AO for the limited purpose of verification of the calculations made by the assessee reproduced and accordingly consider the disallowance u/s 14A of the Act.
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2022 (9) TMI 1568 - ITAT RAIPUR
Grant of approval u/s.80G - Rejection of application observing that the activities of the assessee company are commercial in nature and the company has also not specified or explained for requirement of 80G approval for the company - Assessee granted registration u/s 12AA and the same is continuing - HELD THAT:- Admittedly, the company was granted registration u/s 12AA and is still enjoying the same, in such a situation, finding of the authorities below that the activities of the trust are not charitable, holds no ground and are liable to be held erroneous.
Another ground for rejection of the approval u/s 80G was that the company is involved in commercial activities selling of books/college bags/ etc apart from generating income from tuition fee/hostel fee/bus fee.
On this aspect we are of the view that these are the activities incidental to the main and predominant object of the assessee company, which are for survival and fulfilment of the main objects, thus approval u/s 80G cannot be denied on this argument. This view of ours is find support from the finding of the coordinate bench of ITAT Mumbai in the case of Green Education Trust [2016 (6) TMI 979 - ITAT MUMBAI] - CIT(E) has took a wrong stand in rejecting the application of the assessee in granting approval u/s 80G. We therefore of the view that the order of the Ld CIT(E) deserves to be set aside with a direction to grant approval u/s 80G to the assessee, as sought vide its application in form 10G. Consequently, the sole ground of the appeal of the assessee is allowed.
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2022 (9) TMI 1567 - DELHI HIGH COURT
TP Adjustment - characterization of infra group services transaction - ITAT deleted the addition made holding that the payment made for intra group services was for commercial expediency - HELD THAT:- Admittedly, the issue pertaining to infra group services is covered by the judgement of this Court [2016 (9) TMI 244 - DELHI HIGH COURT] in assessee’s own case ITAT as agreeing with assessee contention that agreement between the Assessee and its AE was a composite one and could not be split up for the purposes of holding that some services are at arm’s length and some are not as on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not.
Not considering interest on outstanding receivables as an international transaction as per Section 92 (B) read with Section 92F(v) - Appellate Authorities below have accepted the contention of the assessee that the assessee was justified in not charging interest on the delayed payments by the AEs and in not levying any interest on delayed payments made by the non-AEs, as the debtor days given to the non-AEs were more than the debtor days given to the AEs. ITAT also recorded that at times 120 days are given to the non-AE entity for payment from billing date. Furthermore, the Authorities below accepted the contention of the assessee that during the Financial Year 2008-09, the assessee had net monthly balance payable to the AEs as opposed to monthly balance receivable from the AEs as alleged by the Assessing Officer.
Consequently, given the concurrent findings of facts by the Appellate Authorities below that the debtor days given to the AEs are less than the debtor days given to non-AEs, no substantial question of law arises.
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2022 (9) TMI 1566 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Seeking stay of Extra Ordinary General (EOGM) meeting - Sections 241 and 242 of the Companies Act - HELD THAT:- The Appellant has filed two Company Petitions bearing CP 38 of 2022 and CP 41 of 2022 under Sections 241 and 242 of the Companies Act, 2013 which are still pending before the Tribunal and the next date of hearing is fixed on 06th October, 2022 in the matter before the Tribunal.
The instant Appeal is disposed off with a request to the National Company Law Tribunal (New Delhi Court V) to expedite the matter without giving unnecessary adjournment and consider all these issues raised by the Appellant and Respondents and pass appropriate orders at an early date, not later than three months from the date of this order.
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2022 (9) TMI 1565 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Declining to stay holding of EGM - It is the case of the Appellant that the Respondents had resorted to this Act by force as they could not do so by way of any judicial proceedings and hence fall within the provisions of section 242 (4) of Companies Act - HELD THAT:- The EGM was convened by majority shareholders of the Company and the requisition of the meeting per se cannot be said to be at fault. We have also taken into consideration the reliefs sought for in I.A. No. 3084 of 2022 whereunder, the Applicant/Appellant sought for stay of the operation of the effect of the resolution passed during the EGM dated 20.07.2022 and also stayed of the removal of the independent Directors. A perusal of the impugned order shows that the matter is posted on 07.09.2022.
The instant Appeal disposed off with a request to the National Company Law Tribunal (Kolkata Bench, Kolkata) to take up the matter on the fixed date i.e. 07th September, 2022 and decide the matter at the earliest and consider all these points raised by the parties.
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2022 (9) TMI 1564 - SUPREME COURT
Suit for the specific performance of contract - seeking to enhance the amount towards the alternative claim for damages - High Court committed any material irregularity or jurisdictional error going to the root of the matter in passing the impugned order or not - applicability of provisions of Order II Rule 2 CPC to an amendment application - amendment of plaint for the purpose of enhancing the amount towards damages could be said to be hit by the doctrine of constructive res judicata or not - judgment and order passed by a coordinate Bench of this Court in the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS SANJEEV BUILDERS PVT. LTD. AND ORS. [2017 (10) TMI 1650 - SUPREME COURT] between the same parties has any bearing on the present appeal or not - present appeal is covered by the proviso to Section 21(5) and Section 22(2) resply of the Specific Relief Act, 1963 or not.
HELD THAT:- One of the cardinal principles of law in allowing or rejecting an application for amendment of the pleading is that the courts generally, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of filing of the application. But that would be a factor to be taken into account in the exercise of the discretion as to whether the amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interest of justice.
In RAGU THILAK D. JOHN VERSUS S. RAYAPPAN & OTHERS [2001 (1) TMI 992 - SUPREME COURT], this Court also observed that where the amendment was barred by time or not, was a disputed question of fact and, therefore, that prayer for amendment could not be rejected and in that circumstances the issue of limitation can be made an issue in the suit itself like the one made by the High Court in the case on hand.
Again, in VINEET KUMAR VERSUS MANGAL SAIN WADHERA [1984 (1) TMI 348 - SUPREME COURT], this Court held that if a prayer for amendment merely adds to the facts already on record, the amendment would be allowed even after the statutory period of limitation.
Applicability of decision in Life Insurance Corporation of India - HELD THAT:- A coordinate Bench of this Court took the view that impleading the respondent No. 3 therein as the plaintiff No. 3 would cause a serious prejudice to the appellant. This Court took the view that no explanation was offered for an inordinate delay of twenty-seven years, which was overlooked by the High Court. Even while allowing the appeal filed by the appellant herein, the coordinate Bench of this Court observed that mere delay would not be a ground for rejecting the amendment. However, in the facts of the case, since the parties not being rustic litigants and all the respondents therein being companies and the dispute being a commercial litigation, the amendment could not have been permitted after twenty-seven years of the suit, as it would take away the substantial rights of defence accrued in favour of the appellant (LIC).
The judgment and order passed by the coordinate Bench of this Court in the Life Insurance Corporation of India has no application so far as the present appeal is concerned. The appellant herein cannot succeed in the present appeal merely on the strength of the judgment and order passed by this Court in the Life Insurance Corporation of India.
Order II Rule 2 of the CPC - HELD THAT:- The expressions "omits to sue" and "intentionally relinquish any portion of his claim" give an indication as to the intention of the legislature in framing the said rule. The term 'sue' can mean both the filing of the suit and prosecuting the suit to its culmination, depending on the context of the provision. In the present case, the legislature thought it fit to debar a plaintiff from suing afterwards for any relief which he/she has omitted without the leave of the court or from suing in respect of any portion of his claim which he intentionally relinquishes. Order II Rule 2(1) provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action - if the two suits and the relief claimed therein are based on the same cause of action then the subsequent suit will become barred under Order II Rule 2 of the CPC. However, we do not find any merit in the contention raised on behalf of the appellant herein that the amendment application is liable to be rejected by applying the bar under Order II Rule 2 of the CPC. Order II Rule 2 of the CPC cannot apply to an amendment which is sought on an existing suit.
Applicability of principle of constructive res judicata - HELD THAT:- The principle of constructive res judicata has no application in the instant case, since there was no formal adjudication between the parties after full hearing. The litigation before this Court has come up at the stage when the courts below allowed the amendment of plaint for the purpose of enhancing the amount towards damages in the alternative to the main relief of specific performance of the contract.
Specific Relief Act, 1963 - HELD THAT:- Section 22 has a non-obstante provision which overrides the CPC. A plaintiff who claims specific performance of a contract for the transfer of immovable property, may in an appropriate case ask for possession, partition and separate possession of the property, in addition to specific performance. The plaintiff may also claim any other relief including the refund of earnest money or deposit paid, in case the claim for specific performance is refused. Corresponding to the provisions of sub-section (5) of Section 21, sub-section (2) of Section 22 stipulates that such relief cannot be granted by the court unless it has been specifically claimed. However, the proviso requires that the court shall at any stage of the proceedings allow the plaintiff to amend the plaint to claim such relief where it has not been originally claimed on such terms which may appear just.
The Specific Relief (Amendment) Act, 2018 - HELD THAT:- It cannot be successfully urged that a suit for specific performance falling under the provisions of the Act, 1963 would not be governed by the provisions of the CPC. It is, therefore, clear that to such a suit the provisions contained in Order VI Rule 17 of the CPC would apply and a plaintiff who has earlier failed to incorporate the reliefs for compensation or who has incorporated the reliefs for compensation but seeks amendment in the same, could seek the permission of the court to introduce these reliefs by way of amendment.
It is important to note that sub-section (5) of Section 21 of the Act 1963 was originally introduced to resolve the confusion over whether the court had the power to grant compensation in a claim for specific performance in absence of any pleading to that effect under the provisions of the Act 1963. Prior to the enactment of the Act 1963 the Law Commission in its 9th Law Commission Report while referring to the diverse opinions expressed by the High Courts recommended that in no case should compensation be decreed unless it is claimed by a proper pleading.
In Somasundaram Chettiar [1950 (3) TMI 36 - MADRAS HIGH COURT], the Madras High Court held that the rationale for not allowing a claim for damages in a suit for specific performance without a specific pleading is based on the principle that the plaintiff must establish its claim for damages and the defendant must be put on notice and correspondingly have an opportunity to adduce evidence that the damages claimed are excessive or that the plaintiff has not suffered any damages.
The impugned order passed by the Division Bench of the High Court should not be disturbed - appeal dismissed.
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2022 (9) TMI 1563 - DELHI HIGH COURT
Taxable income deemed to accrue in India - income from supply of CAS and middleware products to Indian customers - whether fall under the 'royalty' as defined under Section 9(1)(vi) of the Income Tax Act, 1961 (‘the Act’) and Article 12(3) of the India-Swiss DTAA.
HELD THAT:- Admittedly, the questions of law urged in the present appeal are covered by the decision of the Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195.
Though the review petition in Engineering Analysis (supra) is pending before the Supreme Court, yet there is no stay of the said judgment till date.
Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another, (2000 (7) TMI 67 - SUPREME COURT) and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992 (4) TMI 183 - SUPREME COURT) the present appeal is covered by the judgment of the Supreme Court in Engineering Analysis (supra). No substantial question of law.
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2022 (9) TMI 1562 - ITAT PUNE
TP Adjustment - determining the ALP of international transaction related to Business Support Services - correctness of the CIT(A)’s action reversing assessment findings making TP adjustment(s) in assessee’s back office support services segment - CIT(A)’s admittedly appears to have gone by the assessee’s “advance pricing arrangement (APA)” with the CBDT adopting cost + 15% mark up to reverse the TPO’s arm’s length price computation coming to 20.75% - Revenue’s case is that the said agreed mark up is applicable from FYs 2011-12 to 2014-15 whereas we are in AY 2010-11 only - HELD THAT:- We make it clear that Chapter X in the Act is in the nature of a “SPECIAL PROVISION RELATING TO AVOIDANCE OF TAX” i.e. an anti avoidance measure introduced by the legislature.
Hon’ble apex court’s recent landmark decisions PCIT V/s Wipro Ltd [2022 (7) TMI 560 - SUPREME COURT], Commissioner V/s Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT] & CIT V/s. GM Knitting Industries (P) Ltd.[2015 (11) TMI 397 - SC ORDER] have settled the law that the relevant provisions in the Act ought to be put to stricter interpretation only.
Faced with this situation, we reverse the CIT(A)’s findings in issue going against sec. 92CC(4) r.w.s.(9A) of the Act (supra) and direct him to re-decide all of the assessee’s grounds in the lower appeal afresh as per law. This Revenue’s appea is allowed for statistical purposes.
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