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Showing 121 to 140 of 1346 Records
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2021 (1) TMI 1230
Seeking approval of Resolution Plan - section 31 of IB Code and Regulation 39 (4) of The Insolvency and Bankruptcy Board of India (Insolvency Process of Corporate Persons) Regulations, 2016 - HELD THAT:- The perusal of the Resolution Plan shows that the Financial Creditor will get a sum of ₹ 10,00,000/- against the their total claimed amount of ₹ 12,44,9,127/-. The Operational Creditors would receive a sum of ₹ 4,28,000/- as against their total claimed of ₹ 8,56,85,662/- and provisions for statutory liabilities has been made to the tune of ₹ 1,07,800/- and Resolution Applicant also made the provisions of contingent liabilities of ₹ 1,00,000/-. There is no claim submitted by the workmen. Thus, in sum and substance, the Resolution Plan provides for settlement of claim of various stakeholders. It is also noted that the Resolution Plan provides the background of successful Resolution Applicant and its associates. It also provides the details of financial capabilities of the successful Resolution Applicant. The Resolution Plan also provides implementation of Resolution plan within 60 days from the date of approval of the plan by this Authority - the Resolution plan also provides for appointment of RP as the person in-charge to look after the implementation of Resolution Plan. The Resolution Plan has also addressed the issues which resulted into Insolvency of the Corporate Debtor and future business plan so as to such situation does not arise again.
Thus, the revised 'Resolution Plan' filed with the Application meets the requirements of Section 30(2) of I&B Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The 'Resolution Plan' is also not in contravention of any of the provisions of Section 29A, affidavit under section 29A has also been filed by the Resolution Applicant. The Resolution Professional has also certified that the 'Resolution Plan' approved by the CoC does not contravene any of the provisions of the law for the time being in force. The Compliance Certificate is placed on record. The 'Resolution Plan' has been approved by the CoC with 100% voting share.
The Resolution Plan is approved - the approved 'Resolution Plan' shall become effective from the date of passing of this order - application allowed.
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2021 (1) TMI 1229
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - continuation of Status-Quo Order till the next date of hearing - possession of the immovable asset of the Corporate Debtor mortgaged to the Bank has been taken possession by resorting measures under Section 13(4) of the Act - HELD THAT:- The Adjudicating Authority has taken into consideration of taking possession by Appellant before expiry of 60 days. The possession having not been taken in accordance with law the title of the property still vests in Corporate Debtor, which need to be protected to safeguard the interests of Corporate Debtor as well as other Creditors.
The Order passed by the Adjudicating Authority on 31st December, 2021 indicates that the Status-Quo Order dated 30.09.2021 has been continued till the next date of hearing. We have been informed by the Learned Counsel for the parties that the matter both on I.A. 4516 of 2021 as well as the main CP (IB) No. 472/2021 has been fixed for 15th February, 2022. The Order dated 30.09.2021 is now continuing for last more than three months and now 15th February, 2022 is the next date fixed in the matter, we are of the view that at this stage it is not necessary for us to express any final opinion regarding the various issues raised by the parties regarding title and ownership of the immovable properties whether it is still in ownership of the Corporate Debtor or stand transferred to Yes Bank Limited. What is nature of claim of the Financial Creditor-Dewan Housing Finance Corporate Limited quo the immovable property which is also mortgaged to Yes Bank Limited, all these issues have to be considered and decided by the Adjudicating Authority finally.
Appeal disposed off.
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2021 (1) TMI 1228
Disqualification of directors - Section 164 and 167 of the Companies Act, 2013 - HELD THAT:- The Petitioners, being directors in two companies, following MUKUT PATHAK & ORS., YOGESH KHANTWAL, AARTI KHANTWAL, AND VINEET WADHWA VERSUS UNION OF INDIA AND ANR. [2019 (11) TMI 319 - DELHI HIGH COURT], the Petitioners’ DIN/DSC in respect of Talent Scanner Pvt. Ltd., would be liable to be reactivated and the Petitioners would not be treated as suspended from the position of directors in Talent Scanner Pvt. Ltd. Insofar as Bhargava Films Pvt. Ltd. is concerned, the Petitioners are permitted to file the relevant documents and seek condonation of delay in accordance with the applicable laws and regulations, if the same is permissible.
Petition disposed off.
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2021 (1) TMI 1227
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing-dispute or not - HELD THAT:- The existence of dispute is evident from the letter dated 31.01.2019 by the Operational Creditor to the Corporate Debtor.
It is further pertinent to mention that the existence of dispute is evident from the letter dated 29.03.2019 issued by Operational Creditor whereby, the Operational Creditor had referred the dispute to the Ld. Arbitrator for outstanding payment of ₹ 6,49,94,661/- and proposed the name of Mr. Sanjiv Kumar, Additional District and Session Judge (Retd.) in pursuant to Arbitration & Conciliation Act. In pursuance of letter dated 29.03.2019 issued by the Operational Creditor, the Corporate Debtor by its letter dated 04.04.2019 had again informed about deteriorated quality of Crude Palm Oil of Edible Grade and asked the Operational Creditor to pay an amount of ₹ 50 crores towards losses incurred by the Corporate Debtor - The Sole Arbitrator, Mr. Sanjiv Kumar, Additional District and Session Judge (Retd.) after consideration of the disputes raised by both the parties, had passed an Arbitral Award dated 24.09.2019 whereby the Ld. Sole Arbitrator dismissed the Claim being premature and also dismissed the Counter Claim of the Corporate Debtor by recording that the same would be considered only after the Claimant (Operational Creditor herein) has failed to take all possible legal remedies to recover the Claim of the Respondent with the supplier.
It is clear that the dispute must exist before the receipt of demand notice. Be that as it may, on appraisal of the arguments advanced by the Ld. Counsels, it emerges that there were disputes existing prior to the issuance of the Demand Notice - since there is a pre-existing dispute between the parties, we have no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016.
Application dismissed.
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2021 (1) TMI 1225
Appellant seeking benefit of probation on the ground that the sentence already undergone by him would cast a stigma on his profession and he would be disqualified by the ICAI - moral turpitude - incident qua which the Petitioner was convicted took place in 2001, i.e., much prior to him qualifying and being enrolled as a CA - Section 8(v) of the Chartered Accountants Act, 1949 - HELD THAT:- A conviction for an offence involving ‘moral turpitude’ punishable with imprisonment- is a third and higher class of offence under Section 8(v) of the Act and is stipulated as a separate class of disabilities which bars a person’s name from being entered or borne in/continued in the register of the ICAI. This is a graver offence, in terms of the scheme of the Act, juxtaposed to what is contemplated under the third part of the Second Schedule or the fourth part of the First Schedule to the Act.
Although, from a bare reading of sub-section 8(v), it may appear that the Central Government would have the power to remove the disability even in offences involving ‘moral turpitude’, in the opinion of this Court, in case of an offence or a conviction involving ‘moral turpitude’, such power being vested with the Central Government would be contrary to the spirit of the statute as also contrary to the settled judicial precedents, to the effect that `moral turpitude’ would be a complete disqualification. The use of the expression “entered in” contained in Section 8, also shows that offences committed prior to the person qualifying as a CA are also within the purview of the disabilities mentioned under Section 8 of the Act. The only condition upon which a person convicted can be entered into or can continue on the register of ICAI, would be if the person has been granted a pardon.
The Petitioner’s conviction would be attracted by the disability of ‘moral turpitude’ as contemplated under Section 8(v) of the Act. The ICAI shall award reasonable time for the Petitioner to file a fresh reply to the impugned notices, and for him to be heard by the ICAI in accordance with the principles of natural justice. Upon the said hearing being concluded, ICAI shall proceed in accordance with law.
Directions to ICAI - HELD THAT:- As is evident from the facts of the present case, the Petitioner, despite a criminal case being pending at the time of his enrolment as a Chartered Account and thereafter his conviction, was enrolled and was permitted to practice as a CA. This Court has not been shown any policy or disclosure requirements that are asked for from candidates or CAs either at inception or thereafter. There is a clear need for the ICAI to create a framework wherein there is proper disclosure by candidates who apply to become Chartered Accountants, at the inception itself.
In the case of an FIR or a Criminal Complaint having been filed, there ought to be an obligation upon the applicant to keep the ICAI informed and updated, as to the progress in the said Complaint/Case. ICAI shall accordingly frame a policy and a mechanism, if not already in existence, for disclosure by members both at the inception as also on a periodic basis thereafter, of any criminal cases or convictions so that the spirit and intent of the statute is given effect to and the ICAI is not in the dark about the same until it is notified by some information or complaint
Petition dismissed.
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2021 (1) TMI 1224
Late deposit of employees shares of Provident Fund (PF) - Contributions deposited after the due date but before the due date of filing of return of income - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED [2021 (11) TMI 370 - ITAT CHANDIGARH] impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
Educational Cess being deductible expenditure - HELD THAT:- This issue is covered in assessee's favour by the judgment of the Hon'ble Bombay High Court in the case of Sesa Goa Ltd. Vs. JCIT, [2020 (3) TMI 347 - BOMBAY HIGH COURT] has held that since the term “Cess” is not included in clause (ii) of section 40(a)of the I.T. Act, 1961, there is no prohibition in claiming the same as a deduction in computing income chargeable under head of profits and gains of business or profession.
Education cess is not a disallowable expenditure under section 40(a)(ii) - we are of the considered opinion that education cess and secondary education cess paid on income tax is an allowable expenditure. Ground raised by the assessee is allowed.
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2021 (1) TMI 1223
Direction to Respondent No.1/Operational Creditor to repay with interest the money wrongfully received and retained under the three SWIFT remittances to be returned to the Bank Account of the Corporate Debtor along with applicable interest at the rate of 18% p.a. calculated from the date of receipt of payments till actually repaid - HELD THAT:- It is seen that as per the audited account as on 31st March, 2019 the dues payable to the Respondent No.1 (Operational Creditor) is ₹ 91,05,994/- and this fact was admitted by the applicant stating that the audited accounts have been finalized even before the admission of the Corporate Debtor under CIRP. This Tribunal also while admitting the aforesaid Application relied on the Audited Accounts and based on the same it was held that the amount payable to Respondent No.1 (Operational Creditor) is more than the threshold limit of one lakh rupees.
While admission of the matter, during arguments, the Corporate Debtor has not raised any of the points raised in this application, as the applicant was silent waiving the Corporate Debtor right to file an appeal, if the Corporate Debtor was really aggrieved by the aforesaid admission of the matter. Without taking recourse of the remedies available to them, now they have come up with this application to release them from the process of CIRP revoking the order of this Tribunal passed on 7/11/2019. The applicant in the guise of an application under Section 60(5) of the IB Code is trying to re-open an admitted matter which cannot be allowed. Since the matter has attained finality and the Resolution Professional has already filed an application for approval of the Resolution Plan, and that the claim put forward by the Operational Creditor through IA(IBC)/33/KOB/2021 has been dismissed by this Tribunal, it is too late to pass any orders in this matter.
Application dismissed.
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2021 (1) TMI 1222
Seeking for final decision in the next hearing - HELD THAT:- The High Court is requested either to dispose of the writ petition(s) itself or take a final decision on the interim application on the next date of hearing i.e. 12-2-2021. In case, final decision cannot be taken on the above said date, a short adjournment may be granted and the interim application may finally be decided as early as possible.
The Special Leave Petitions stand disposed of.
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2021 (1) TMI 1221
Refund of unutilized Input Tax Credit - inverted duty structure - rejection of refund of appellant mainly on the ground that of Para 4.2 of Circular No. 59/33/2018-GST, dated 4-9-2018, the claimant is not eligible for the refund on input services and eligible for the refund on Inputs - HELD THAT:- The appellant has pleaded that the tax paid on services is also covered under the definition of input tax credit as defined under Section 2(63) read with Section 2(62) of CGST Act, 2017. In absence of specific exclusion regarding refund of input tax credit on services under Section 54(3) of CGST Act, 2017 may not be denied by the Authorities. Further, the appellant has pleaded that the benefit given under Section cannot be restricted/withdrawn by Rules and section will prevail over rule as Rules are subordinate to the Act.
The Central Government, in contemplation of the powers conferred by Section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), has amended the Central Goods and Services Tax Rules, 2017 by issuing the Notification No. 26/2018-Central Tax, dated 13-6-2018 - the subject matter has also been under consideration at various judicial and quasi-judicial authorities and the recent progression in the matter is prominent to deliberate cautiously hereunder, which is not only a obiter dicta but also laid the foundation for formulation of the principles of law for the purpose of deciding the present problem before us on this issue.
The amendment by the Notification No. 26/2018-Central Tax, dated 13-6-2018 is intra vires to the Section 54(3) of the CGST Act, 2017 provisions. Further, the Rule 89(5) is not contrary to the provisions of Section 54(3) of the CGST Act, 2017 as amended albeit it, as a corollary, Rule 89(5) of the CGST Rules, as amended, is in conformity with Section 54(3)(ii).
The scope, function and role of amendment as adumbrated in above paras and on applying the ratio decidendi of the Hon’ble Madras High Court, I find that the lexes of the amendments are amply justified. Thus, refund of input services/capital goods on account of inverted duty structure is not admissible in terms of Section 54(3) read with Rule 89(5) of the CGST Act/Rules, 2017 - appeal dismissed.
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2021 (1) TMI 1220
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - respondent has taken a defence that the Director who has entered into an agreement with the applicant had obtained the amount without the approval of the Board of Director and without having special resolution passed by the board of Director - HELD THAT:- Mere plain reading of the provision shows that under this provision any person may inspect the documents, which are kept in the office of Registrar regarding the incorporation of the company, which includes the Article of Association and Memorandum of Association. 'The documents which a person is entitled to get from the office of Registrar u/s 399 of the Companies Act and if he fails to see and verify it prior to entering with a contract with the company then the company is not liable for that act, if it is done by the Director, because it comes under the doctrine of constructive ' notice. But the question is "does the doctrine of constructive notice allow the outsiders to have notice of internal affairs of the company", the answer is no, because doctrine of constructive notice is subject to exception i.e Indoor Management and that is the reason petitioner has taken this plea.
In view of Section 179(3) (d) the Board of Director of Company shall exercise its powers subject to the provision contained in the Act or in the memorandum or articles and one of the power which is referred in Section 179 (3)(d) of the Companies Act, 2013 is also to borrow the money, of course, in view of Section 180(1)(c) that is subject to special resolution passed by the Board of Directors and in view of Section 180(5) of the Companies Act, 2013 no debt incurred by the company in excess of the limit imposed by Clause C of Sub Section 1 shall be valid or effectual unless the lender proves that he advanced the loan in good faith without knowledge that the limit imposed by that clause had been exceeded but herein the case in hand, we notice that it is not the case of respondent that the debt incurred by the company is in excess of the limit imposed by Section 180(1) (c) of the Companies Act 2013 rather the claim of the respondent is that the Director who signed the loan agreement had not been authorized by the special resolution passed by the Board of Directors as required under Section 180 of the Companies Act, 2013, therefore, Section 180(5) of the Companies Act is not applicable.
The receiving of the amount has been not denied by the respondent and it is also admitted by the respondent that amount has not been paid because the director who entered into an agreement was not authorized by the special resolution as required under Section 180(1) of the Companies Act to borrow the loan and in view of Section 7(5) of the IBC the moment the Adjudicating Authority came to the conclusion that default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional then the Adjudicating Authority has no option but to admit the application filed under Section 7 of the IBC.
The applicant has succeeded to establish that there is a financial debt and Corporate Debtor is in default in making the payment of that financial debt, the application is complete - Application admitted - moratorium declared.
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2021 (1) TMI 1218
Capital gain computation - date of transfer of asset - execution of the JDA - amount assessed for the purposes of stamp duty be considered as Sale Consideration for the purposes of computation of capital gains - scope of amendment to section 50C - whether the CIT(Appeals) was right in holding that amendment to section 50C of the Income-tax Act, 1961 [the Act] which was introduced w.e.f. AY 2007-08 was applicable retrospectively for AY 2014-15 when the language used in the proviso does not indicate that it was inserted as a clarification? - HELD THAT:- JDA was executed on 1.3.2013. MoU was entered on 8.4.2013. The guidelines value was revised on 12.8.2013. According to the assessee, transfer took place on the date of JDA on 1.3.2013 and the relevant value as on the date of JDA or the date of MoU to be applied, instead of applying guidelines value on 12.8.2013 in view of the proviso to section 50C(1) of the Act.
There was payment of ₹ 2,50,00,000 on 23.11.2011 by cheque No.259865 drawn on Vijaya Bank, Sarakki Branch, Bangalore. Being so, the argument of the ld. DR is that MoU is not suggesting any payment so as to apply the proviso to section 50C, thus it is deemed retrospective in nature. In our opinion, as held by the Madras High Court in the case of Vummudi Amarendran [2020 (10) TMI 517 - MADRAS HIGH COURT], proviso to section 50C(1) is retrospective in nature applicable from AY 2014-15. Further part of the consideration has already been passed through MoU as enumerated above. It cannot be said that no consideration is paid on the date of MoU. This finding of the lower authorities is not proper. Accordingly, we hold that proviso to section 50C(1) by the Finance Act, 2016 is retrospective and also the assessee proved that the 2nd proviso to section 50C(1) is satisfied since the assessee has paid a part of sale consideration on the date of such MoU dated 8.4.2013. In view of this, we hold that the guidance value has to be computed as prevailing on the date of MoU dated 8.4.2013. Appeal of assessee allowed.
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2021 (1) TMI 1217
Valuation of imported goods - loading of charges towards manuals, software, installation and commissioning of the plant to the value of the imported goods - Zero Duty EPCG scheme - rejection of discount and loading of invoice value - HELD THAT:- In the present case, both in the quotation as well as purchase order, the charges for installation and commissioning have been separately shown by the assessee. Thus, it is seen that for the activities undertaken after importation of the goods need not be included in the invoice value when the cost of such service/activity is shown separately. It is therefore clear that the charges which are for services undertaken after import cannot be loaded into the invoice value.
The loading of charges towards manuals, software, installation and commissioning of the plant to the value of the imported goods is against provisions of law and not sustainable.
The gross amount quoted, the discounts offered and the final price of each vendor has been reproduced in this paragraph by the Commissioner (Appeals). On the basis of these facts, he has concluded that there is a practice of quoting a higher price and offering discounts to arrive at the final price in the industry - Though the department contends that the discount offered is on the higher side, there is no evidence adduced by them to support their contention. For this reason, there are no grounds to deviate from the view taken by the Commissioner (Appeals) on this issue.
The impugned order requires to be set aside with regard to the loading of manuals, software, installation and commissioning charges to the invoice value - Commissioner (Appeals) in setting aside the rejection of discount and loading of 46.89% to the invoice value is legal and proper - Appeal dismissed - decided against Revenue.
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2021 (1) TMI 1216
Acceptance of offer - acceptance of a conditional offer with a further condition - Breach of contract or not - entitlement to recover the suit amount from the Defendant - applicability of time limitation - whether the acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor? - interpretation of Indian Contract Act - HELD THAT:- The High Court found that there was no dispute that tenders had been called for and that it was the case of the Respondent Port Trust that the offer of the Appellant had in fact been accepted and purchase order issued on 31st October, 1990 under registered Post that had been acknowledged but refused by the Appellant. The High Court also recorded the contention of the Appellant that in the absence of previous approval from the Board of Trustees of the Respondent-Port Trust, under the proviso to Section 34(1) of the Major Port Trust Act 1963, there could be no enforceable contract. Even though the High Court referred to the submission of the Appellant that the letter of intent was subject to ratification by the Board and the only witness of the Respondent-Port Trust had admitted that no contract had been concluded, the High Court did not deal with the same.
It is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute. It can give no room for doubt. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication. However, when the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition as held by this Court in HARIDWAR SINGH VERSUS. BAGUN SUMBRUI AND ORS. [1972 (2) TMI 95 - SUPREME COURT]. An acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter proposal which must be accepted fully by the original proposer, before a contract is made.
In UOI. VERSUS BHIMSEN WALAITI RAM [1969 (9) TMI 109 - SUPREME COURT], a three-Judge Bench of this Court held that acceptance of an offer may be either absolute or conditional. If the acceptance is conditional, offer can be withdrawn at any moment until absolute acceptance has taken place.
The High Court also overlooked Section 7 of the Contract Act. Both the Trial Court and the High Court over-looked the main point that, in the response to the tender floated by the Respondent-Port Trust, the Appellant had submitted its offer conditionally subject to inspection being held at the Depot of the Appellant. This condition was not accepted by the Respondent-Port Trust unconditionally. The Respondent-Port Trust agreed to inspection at the Depot of the Appellant, but imposed a further condition that the goods would be finally inspected at the showroom of the Respondent-Port Trust. This Condition was not accepted by the Appellant. It could not, therefore, be said that there was a concluded contract. There being no concluded contract, there could be no question of any breach on the part of the Appellant or of damages or any risk purchase at the cost of the Appellant. The earnest deposit of the Appellant is liable to be refunded.
Since it is held that the Appellant was neither in breach nor liable to damages, it is not necessary for us to examine the questions of whether the compensation and/or damages claimed by the Respondent Port Trust was reasonable or excessive, whether claim for damages could only be maintained subject to proof of the actual damages suffered, and whether the Respondent Port Trust had taken steps to mitigate losses - the Appellant was entitled to refund of earnest money deposited with the Respondent-Port Trust. The earnest money shall be refunded within four weeks with interest @ 6% per annum from the date of institution of suit No. 450 of 1994 till the date of refund thereof.
Appeal allowed.
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2021 (1) TMI 1215
Transfer pricing adjustment made in respect of "Engineering Design Segment" - non-USA related transactions - HELD THAT:- USA related transactions constituted 96.30% of the total turnover of EDS segment for margin was agreed to be 15.85% under MAP resolution. The coordinate bench has taken the view that the same rate may be adopted for non-USA related transactions also in the assessee's own case relating to 2008-09[2021 (7) TMI 84 - ITAT BANGALORE] - Accordingly, following the decision rendered by the coordinate bench in AY 2008-09, we direct the AO/TPO to adopt the margin of 15.85% to non-USA related transactions also under engineering design services segment.
Transfer Pricing adjustment made in respect of "Marketing Support Services" - Comparable selection - HELD THAT:- We notice that M/s. Asian Business Exhibition & Conferences Ltd. and ICC international Agencies Ltd. have been directed to be excluded by the coordinate bench in the case of Electronic Imaging India Pvt. Ltd. [2017 (7) TMI 1335 - ITAT BANGALORE]. Following the above decision, we direct exclusion of both these companies.
After exclusion of the above said 2 companies, only M/s. Cyber Media Research Ltd. would remain. The TPO may determine the sufficiency or otherwise of one comparable company after considering the facts of the case and after hearing the assessee.
Working capital adjustment is supported by the decision of coordinate bench in the case of Huawei Technologies India Pvt. Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] we direct the A.O. to allow working capital adjustment on actual basis.
Disallowance u/s. 40(a)(ia) in respect of broad band connectivity charges - HELD THAT:- As decided in own case[2021 (7) TMI 84 - ITAT BANGALORE]we direct the A.O. to delete the disallowance of broadband charges made u/s. 40(a)(ia) as held assessee has simply obtained broadband/Internet facility from the service provider M/s. Tata Indicom. It is not a case where a service contract has been entered into. The facility is open to all and sundry and any member of the public can avail of it. In such circumstances, the view of the AO that the nature of service rendered as an element of implicit contract is struck down and therefore, the addition cannot be sustained in first appeal.
Disallowance u/s. 40(a)(ia) of depreciation claimed on software purchases for non-deduction of tax at source - as submitted by Ld. A.R., depreciation is not an item included u/s. 40(a)(ia) of the Act and hence the depreciation cannot be disallowed - HELD THAT:- We find support by this proposition on the decision rendered by the coordinate bench in the case of UKN Properties Pvt. Ltd.[2021 (7) TMI 106 - ITAT BANGALORE] - Accordingly, the disallowance of depreciation u/s. 40(a)(ia) of the Act is liable to be deleted. The Ld. DRP however has directed the A.O. to treat software purchases as revenue expenditure and disallow the same u/s. 40(a)(ia) of the Act. In this regard, the Ld. CIT(A) has followed the decision rendered in the case of Samsung Electronics Company Ltd.[2011 (10) TMI 195 - KARNATAKA HIGH COURT] which has since been reversed by Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] Accordingly, in our view, the disallowance of entire amount of software purchases u/s. 40(a)(ia) of the Act treating the same as revenue expenditure requires fresh examination at the end of the A.O
Business profits eligible for deduction u/s. 10A of the Act - A.O. had taken the view that the expenses deducted from export turnover cannot be deducted from the total turnover for the purpose of computation of deduction u/s. 10A - HELD THAT:- DRP directed the Assessing officer to deduct the expenses from total turnover also following the decision rendered by jurisdictional Hon'ble Karnataka High Court in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. The above said decision of Hon'ble High Court has since been upheld by Honourable Supreme Court in the case of HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT]. Accordingly, we do not find any infirmity in the direction given by Ld. DRP.
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2021 (1) TMI 1214
Dishonor of Cheque - insufficiency of funds - whether the Judgments of courts below suffer from any incorrectness, illegality and impropriety in convicting and sentencing the petitioner for the offence under section 138 of Negotiable Instruments Act? - HELD THAT:- The petitioner admitted the cheque as his cheque and the signature in the cheque as his signature. Admittedly, the cheque had been returned, since there was no funds in the account of the petitioner when the cheque was presented for collection.
The learned counsel for the respondent submitted that nowhere in the reply, the petitioner has stated with regard to the alleged chit transaction and depositing the cheque as a security for chit transaction. Ex.P.7 Account statement shows that the respondent had sufficient means to lend the amount of ₹ 5,00,000/- to the petitioner. Moreover, there is presumption under 139 of the Negotiable Instruments Act that a cheque had been issued towards discharging the legally enforceable debt or liability, unless the contrary is proved. The petitioner did not prove the contrary fact against the fact of issuance of cheque for discharging the debt and return of the cheque for the reason that there was no funds in the account of the petitioner.
With regard to burden of proof, it is said that whereas the prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof to prove a defence on the part of an accused is preponderance of probability. Inference of preponderance of probability can be drawn not only from the materials brought on record by the parties but also by reference to circumstances upon which he relies.
When there is no material to show that the respondent is a regular income tax assessee and he has been regularly filing income tax returns, this Court is of the considered view that on the basis of Ex.P.7 one cannot come to the conclusion that the respondent has sufficient means to lend a sum of ₹ 5,00,000/- to the petitioner, especially when the petitioner said that he had no prior acquaintance with the respondent - It is seen from the evidence of PW-1 that he did not know the petitioner prior to lending a huge sum of ₹ 5,00,000/-. He came to know about the petitioner through one Rajendran. He did not even know the address of the said Rajendran. He did not get any supporting document like a promissory note to evidence the loan transaction. These aspects strengthens the case of the petitioner that the cheque he gave to Sathyan as a security for chit transaction is misused through the respondent. It is true that the petitioner has not happily worded in the reply that the cheque in question was given as security to Sathyan in chit transaction - There is no denial of the fact that Satyan is the close relative of the respondent. The fact that the respondent had not produced any acceptable evidence to show that he has means to lend a sum of ₹ 5,00,000/- to the petitioner, when seen in the backdrop of the case projected by the petitioner that the cheque was given as security in the chit rune by Satyan, probalised the case of the petitioner that the cheque which was given as security in the chit transaction is misused by the respondent.
Both the Trial court and the Appellate court have not considered these vital aspects while proceeding to dispose the case and heavily placed reliance on the presumption under section 139 of the Negotiable Instruments Act, without minding that this provision merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. However, this presumption does not extend to the existence of a debt also. Existence of a legally enforceable debt is not a matter of presumption under section 139 of Negotiable Instruments Act - this court concludes that the judgments of the court below in convicting and sentencing the petitioner under Section 138 of Negotiable Instruments Act is not in consonance with established fats and position of law and has to be necessarily set aside.
Petition allowed.
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2021 (1) TMI 1213
Quantification of service tax - Incorrect calculation of service tax - construction of residential complex service - non-inclusion of land cost in the taxable value of the flats for calculation of service tax - abatement of 75% availed, when the eligible abatement is only 67% on the gross amount - HELD THAT:- From the facts itself, it is clear that the construction services rendered by the appellants are composite in nature involving materials as well as services. This Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI] had analysed the issue whether the demand under construction of residential complex services is sustainable in services which are of composite in nature. After introduction of Works Contract Services, the demand can be made only under Works Contract Services in the case of construction services which are composite in nature.
The decision in Real Value Promoters is squarely applicable to the facts of the case in both these appeals. The demand made under construction of residential complex service cannot therefore sustain - Appeal allowed - decided in favor of appellant.
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2021 (1) TMI 1212
Rejection of refund claim - mismatch with regard to the description of goods in the sales invoices when compared to the Bills of Entry - HELD THAT:- In page-20 the sales invoice describes the goods as “ENABLE 3505HH (LDPE)”, whereas in the Bills of Entry the product is described as “ENABLE 3505HH (LLDPE)”. In pages 50-74, the appellant has produced the Chartered Accountant’s Certificate along with the reconciliation statement. The Chartered Accountant has verified the accounts and stated that the appellants are eligible for the refund in respect of SAD paid by them. The correlation sheet is also enclosed along with the Chartered Accountant’s Certificate to show the description of the goods in the Bills of Entry and the VAT paid for the goods as evidenced by the sales invoices. The appellant has sufficiently proved and fulfilled the requirements as per the Notification No. 102/2007-Cus., dated 14-11-2007.
After perusal of the documents submitted by the appellant, the rejection of refund claim is without any legal or factual basis. The impugned order to the extent of rejecting the refund claim in respect of 4 Bills of Entry is set aside.
Appeal allowed - decided in favor of appellant.
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2021 (1) TMI 1211
Anti-competitive agreements - Predatory pricing - dominance of Ola in the relevant market of radio taxi services in Bengaluru and its consequent abuse within the provisions of section 4 of the Act - possibility of more than one dominant party in the relevant market - abuse of position of dominance and matter remanded back for investigation against Uber - HELD THAT:- The below cost pricing by Ola was not predatory pricing with a view to dislodging any competitor from the market but towards establishing itself as an effective and reliable brand in the market and also opening up a latent market to its advantage through awareness generation about its brand and network/platform through promotional initiatives like discounts and incentives and attracting new customers and gaining riders’ confidence. As Ola started from a low market share of about 20%, we cannot agree that it was at that initial time in a dominant position in the market and was trying to push out competitors from the market by employing below-cost, predatory pricing. Increase in its market share over a period of time, we feel, was due to a combination of factors, of which below–cost pricing was one.
Since this pricing strategy was combined with other actions like ease of booking using a smooth and functional technology platform accessible on mobile phones, visible branding, riders’ security, benefits to drivers, all of which were quite effective in earning the riders’ and drivers’ confidence, Ola could become their radio taxi service of preference.
The agreements that Ola has with drivers covers many aspects, which concern welfare measures for drivers and helping them source credit for buying vehicles. It does stand guarantee for the loans thus there is no binding for the drivers to remain loyal to Ola because of financial lock-in. The incentives provided to drivers are dynamic and not constant in time. The drivers have the option to shift to other network depending on their requirement and convenience. Hence the driver’s agreement that Ola has with drivers with entirely optional and does not in any way bind the drivers to Ola’s network in any way. The option to move away from Ola’s network is always there in case the drivers so want - there are no drivers agreements anti-competitive in violation of section 3 of the Act.
Looking to the market behavior of Ola, a clear view is derived that Ola was providing a mobile-app based solution to the riders and drivers in a new and easy way for taxi rides which includes taxi booking and payment. It was not enjoying a dominant position in the relevant market in violation of Section 4 of the Act as it was itself a new entrant in the market. It employed a pricing strategy to establish its brand and network to provide much more efficient and user-friendly services to customers in real time at any place and anytime, to edge out the competitors who were already present in the radio taxi market in Bengaluru, which cannot be faulted as being predatory pricing.
Moreover since Ola is not in dominant position the question of abuse of dominant position through predatory pricing also does not get attracted - appeal dismissed.
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2021 (1) TMI 1210
Seeking termination of the mandate of originally constituted Arbitral Tribunal - Seeking to appoint a new arbitrator - Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The Arbitral Tribunal – Stationery Purchase Committee consisted of officers of the respondent-State. Therefore, as per Amendment Act, 2015 – Sub-section (5) of Section 12 read with Seventh Schedule, all of them have become ineligible to become arbitrators and to continue as arbitrators. Section 12 has been amended by Amendment Act, 2015 based on the recommendations of the Law Commission, which specifically dealt with the issue of “neutrality of arbitrators”. To achieve the main purpose for amending the provision, namely, to provide for “neutrality of arbitrators”, sub-section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. In such an eventuality, i.e., when the arbitration clause is found to be foul with the amended provision, the appointment of the arbitrator would be beyond the pale of the arbitration agreement, empowering the Court to appoint such an arbitrator as may be permissible.
It cannot be disputed that in the present case, the Stationery Purchase Committee -Arbitral Tribunal comprising of officers of the respondent-State are all ineligible to become and/or to continue as arbitrators in view of the mandate of sub-section (5) of Section 12 read with Seventh Schedule. Therefore, by operation of law and by amending Section 12 and bringing on statute sub-section (5) of Section 12 read with Seventh Schedule, the earlier Arbitral Tribunal – Stationery Purchase Committee comprising of Additional Secretary, Department of Revenue as President and (i) Deputy Secretary, Department of Revenue, (ii) Deputy Secretary, General Administration Department, (iii) Deputy Secretary, Department of Finance, (iv) Deputy Secretary/Under Secretary, General Administration Department and (v) Senior Deputy Controller of Head Office, Printing as Members, has lost its mandate and such an Arbitral Tribunal cannot be permitted to continue and therefore a fresh arbitrator has to be appointed as per Arbitration Act, 1996.
This Court also negatived the submission that as the contractor participated in the arbitration proceedings before the arbitrator therefore subsequently, he ought not to have approached the High Court for appointment of a fresh arbitrator under Section 11 of the Arbitration Act, 1996.
Appeal allowed.
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2021 (1) TMI 1209
Application for closure of its Fixed Deposit on the ground that since Corporate Insolvency and Resolution Process has been initiated against the Corporate Debtor - redemption of fixed deposits to the Account of the Corporate Debtor - whatever the assets belonging to the Corporate Debtor have to come under the control and custody of the RP as per I&B Code - whether or not the fixed deposits lying with the Respondent Bank are to be construed on par with Performance Bank Guarantee covered by the proviso to Section 3(31) of the Code? - HELD THAT:- A performance guarantee is issued to one party of a contract as a guarantee against the failure of the other party to perform the obligations specified in the contract, it is usually provided by a Bank to make sure a contract completes designated project, in the case of financial guarantee, it reassures repayment of money in the event of non completion of repayment. We cannot attribute any logic to it, we only can say performance guarantee alone is exempted by the Code, therefore unless the guarantee has attributes of performance guarantee, it cannot be said that it is exempted by the Code.
The case of the Respondent Bank is, it falls under the proviso to Section 3(31) of the Code, whereas the RP case is it will not fall under the exemption mentioned above. In the present case, it is nether Performance Guarantee, nor a fixed deposit linked to performance guarantee, it is like any other security given against loan facility availed, under this Code, the security interest covered by loan facility is also hit by section 14 of the Code, therefore the fixed deposit given as security against loan facility cannot be equated with the performance guarantee, and the right of lien or set off ordinarily available to the Respondent Bank is not available during CIRP initiated under the Code.
The Respondent Bank is directed to transfer the amount payable (including interest accrued thereon) on closure of Fixed Deposits held by the Corporate Debtor - Application allowed.
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