|
Advanced Search Options
Case Laws
Showing 261 to 280 of 1125 Records
-
2020 (11) TMI 865
Rejection of books of accounts - Profit estimation - enhancement of profit ratio to 25% as against profit ratio declared by the assessee to the tune of 20% - HELD THAT:- The assessee on its part has not filed complete details , nor stock records were filed as well balance sheet were not filed. The authorities below have detailed in their orders about non submission of records by the assessee. The details called for by the Bench has also not been filed for the profits declared in the preceding years and its acceptability by Revenue for those years. It is important to compare profit ratio declared by the assessee in the earlier years and the acceptability of the same by the Department in those years
Assessee was directed by the Bench to file complete details of the profit ratios of the preceding years declared by the assessee and its acceptability by Revenue for those years , but the same is not filed before us rather details of succeeding years are filed - we are remitting the matter back to AO for fresh enquiry as to profit declared by the assessee in the earlier three years and its acceptability by Revenue and if the same were accepted by Revenue in those three years and similar business is carried on by the assessee in the impugned ay, then in that situation, the AO is directed to adopt average of the profits for the last three years or the profits declared by the assessee for the impugned ay which ever is higher - in case suppression is detected by AO keeping in view peculiar/specific facts(evidences) and circumstances in the year under consideration, then the onus is on the AO to bring on record profit earned by other persons in the similar businesses, and then based upon the same, the profit of the assessee be computed by Revenue for impugned ay. Thus, the matter is remitted back to the AO for denovo determination of the issue on merits.
Additions being made with respect of income from business of ‘PAAN’ alleged to have been carried out by the assessee - assessee has demonstrated before the authorities below that the business of PAAN were carried out by his father and not by the assessee - HELD THAT:- The Revenue is not able to demonstrate with evidence that the assessee was engaged in the business of PAAN also and income from the business of PAAN has not been declared by assessee in the return of income filed by assessee with Revenue. The powers of the ld. CIT(A) are co-terminus with the power of the AO and he could have made detailed enquiry to unravel the truth , but no concrete evidence/findings are brought on record to rebut contentions of the assessee that business of PAAN was carried out by his father from the same shop outlet in Civil Lines, Allahabad and the same has been offered for taxation by his father - since no material/evidence is available on record to prove that business of PAAN was carried out by assessee, we hereby delete the Addition made by the AO on account of business of PAAN which was later confirmed by the CIT(A). - Decided in favour of assessee.
Addition with respect to advance discount given by M/s Pepsico in the month of August 2007 to the assessee - HELD THAT:- There is no justification offered by the assessee in not offering to tax the said amount of ₹ 5,00,000/- in ay: 2008-09 - there is no concrete argument backed with any evidence submitted by learned counsel for the assessee as to why the additions upheld by learned CIT(A) be not confirmed by us and under these circumstances we find that there is no justification that the said amount of ₹ 5,00,000/- should not be brought to tax in the hands of the assessee for impugned ay: 2008-09 . Thus we hold that ₹ 5,00,000/- is taxable in the hands of the assessee for the impugned ay: 2008-09 under consideration and hence we confirm this additions as were made AO which were later confirmed by learned CIT(A) , and dismiss these ground of assessee.
-
2020 (11) TMI 864
Entitlement to cost of improvement and consequent indexed cost of improvement - Assessee jointly owned by the assessee and his wife - HELD THAT:- Structures show boundary wall, gate, windows, fitting etc but it is not clear that this structure is located on the same land which was sold by the assessee and his wife. As we have noted above, the assessee’s wife who was holding 50% title on the said land, has not been allowed cost of improvement or indexed cost of improvement by the AO and no further appeal or any other proceedings have been initiated by her accepting the rejection of claim by the AO. No hesitation to hold that the assessee is not entitled for any cost of improvement and consequent indexed cost of improvement. Therefore, this claim of the assessee being not sustainable, stands dismissed.
Benefit of section 54F denied as no investment whatsoever has been made in the name of the assessee - HELD THAT:- In this case, the assessee has purchased property in the name of his wife and son we are of the view that the exemption u/s. 54F cannot be denied to the assessee. In view of cases RAVINDER KUMAR ARORA [2011 (9) TMI 343 - DELHI HIGH COURT], we set aside the orders of lower authorities and direct the AO to recalculate the exemption u/s.54F of the Act keeping in view the amount of investment made by the assessee towards purchase of said flat as per provisions of Section 54F. Also see SHRI KAMAL WAHAL [2013 (1) TMI 401 - DELHI HIGH COURT]
-
2020 (11) TMI 863
Disallowance u/s 14A read with Rule 8D - absence of any exempt income reported by the assessee - CIT(A) deleted the said disallowance - HELD THAT:- No infirmity in the impugned order of the ld. CIT(A) deleting the disallowance made by the Assessing Officer u/s 14A of the Act by holding that in the absence of any exempt income reported by the assessee during the year under consideration, there was no question of making any disallowance u/s 14A of the Act. The same is accordingly upheld on this issue dismissing the appeal of the Revenue.
-
2020 (11) TMI 862
TDS u/s 194C - determination of milling cost paid by the assessee - payments which were made in kind - AO observed that the amount need to be increased by the cost of by-product for the purpose of deduction of tax at source - short deduction of TDS - HELD THAT:- As decided in own case [2018 (12) TMI 398 - ITAT CHANDIGARH] the property in the by-products comes into ownership of the millers from the very point of coming of it into existence, hence, in this case the assessee were not the owners of the by-products. Another factor for consideration is that the property passed 'in kind' should have some ascertainable and determinable value, which can be taken as part of the consideration paid for the work done.
It is the nature of the contract, term of the agreement, the intention of the parties and overall facts and circumstances of the case which are required to be analyzed and considered for determining whether the provisions of section 194C or other similar provisions of the Chapter would be attracted or not in a particular case. As discussed above in detail, since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. This issue is decided in favour of the assessee
-
2020 (11) TMI 861
Assessment made without issuing statutory notice u/s. 143(2) - HELD THAT:- The parties were directed to address their arguments whether a remand back to the ld. CIT(A) would satisfy the grievance as admittedly the fact whether notice u/s. 143(2) was issued or not needs to be verified. Its mere existence on the file cannot be said to meet the legal requirements which position stands well settled by Courts. Both the parties agreed to remand the issue back to the file of the ld. CIT(A).
In the interests of justice, a categoric finding has to be available as to whether notice u/s. 143(2) was issued to the assessee or not. Accordingly, the impugned order is set aside in toto and the issues are restored back to the file of the CIT(A) with a direction to pass a speaking order in accordance with law addressing the specific grievance. appeal of the assessee is allowed for statistical purposes.
-
2020 (11) TMI 860
Revision u/s 263 - order of AO was erroneous since it had been passed without inquiring on the issue in consideration before him in the proceedings u/s. 147 - assessee having availed contrived losses by resorting to Client Code Modification(CCM) - AO had accepted the generic reply of the assessee and not cared to enquire as to under what circumstances such huge number of edits were required to be done in the client codes - HELD THAT:- The figure has been incorrectly taken as ₹ 11,58,692.40 instead of ₹ 1,15,86,912.40. Further the 'mtm' markings are not the profits earned by the assessee on account of trading in futures and options, but represent the daily settlement of the unsold trades at their prevailing market price. PCIT we find has neither picked up the correct figures from the statement of accounts submitted by the brokers, nor understood what the figures represented and accordingly arrived at an incorrect finding that the assessee had not reflected true profits, running in crores, earned on trading in futures and options.
The vague and illogical show cause notice, the incorrect interpretation of documents by the Ld. Pr. CIT all show the arbitrary manner in which this extraordinary power to revise the order of the AO has been exercised by the Ld. Pr. CIT.
Issue on which Ld. PCIT has exercised her powers u/s. 263 as per the show cause notice, is too trivial, involving income of ₹ 2.54 lacs only, to justify exercise of the extraordinary power of revision u/s. 263 of the Act, which has grave and serious consequences, to the prejudice of assesses, of relooking into an already concluded assessment.
Since we have found the impugned order of the Ld. Pr. CIT u/s. 263 of the Act, to have been passed in an arbitrary manner, without confronting the assessee with the error in the order of the AO, and based on incorrect appreciation of facts, we have no hesitation in setting aside the order of the Ld. PCIT passed u/s. 263 - Decided in favour of assessee.
-
2020 (11) TMI 859
Reopening of assessment u/s 147 - Deduction u/s 80IB - Disallowance of difference in opening stock outside the books of accounts - CIT-A deleting the disallowance admission of additional evidence without giving an opportunity to the AO - HELD THAT:- The additional evidence was rightly admitted by the CIT (Appeals) as the copies/documents which were not available during the assessment proceedings were produced at the time of appellate proceedings before the CIT (Appeals).
There is a clear finding by the CIT (Appeals) that in the balance sheet of the assessee company as on 31.03.2011 an amount of ₹ 18,85,46,088/- was shown as receivable from M/s. Abhinav Steels Limited. The transfer of inventory of ₹ 6,09,43,809/- was duly recorded in its books of accounts and thus the same cannot be regarded as the stock sold outside the books of accounts.
These documents were very well available before the Assessing Officer as well. In the financial statements of the assessee, all these calculations and the inventory specifications were given which was placed before the CIT (Appeals). Since the demerger has taken place on book value, therefore, there is no capital gain/loss as per the provisions of the Income Tax Act. Thus, there is no need to interfere with the finding of the CIT (Appeals). Hence, appeal of the Revenue is dismissed.
-
2020 (11) TMI 858
Addition on the basis of statement of son as recorded u/s 132(4) - documents as found and seized in search - HELD THAT:- Addition was made on the basis of admission of assessee’s son during the course of search. As contended before us, that all these documents were properly recorded in the regular books of accounts of the persons to which these documents actually pertained. However, we find that the assessing officer did not establish the fact that any of the documents as found and seized was not recorded in the books of accounts of the persons to which these documents actually pertained.
Therefore, we find force in the contention of the assessee that without referring to any of the documents was not binding on the assessee and the same cannot be used against the assessee as an evidence and that too in search assessment proceedings.
No adverse material was filed by the revenue to controvert the factual submission advanced before us, we direct the assessing officer to delete the addition - Decided in favour of assessee.
-
2020 (11) TMI 857
Disallowance u/s. 36(i)(iii) - interest expenditure in respect of interest free advances/payments made by the assessee to different parties - HELD THAT:- The issue is squarely covered by the various decisions of the High Courts as well as of the apex court of the country holding that if the assessee is possessed of sufficient own interest free funds to meet the investments/interest free advances, then, under the circumstances, presumption will be that interest free advances/investments have been made by the assessee out of own funds/interest free funds.
Reliance in this respect can also be placed on the decision of the Hon'ble Supreme Court in the case of 'Hero Cycles (P) Ltd. [2015 (11) TMI 1314 - SUPREME COURT ] and in the case of 'CIT (LTU) Vs. Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] - Thus, as per the settled law no disallowance u/s. 36(i)(iii) of the Act is warranted on this issue. The disallowance made by the AO on this issue is ordered to be deleted. The issue is accordingly allowed in favour of the assessee.
-
2020 (11) TMI 856
Commission income for providing accommodation entries of marble sales - HELD THAT:- The assessee is also having two proprietorship concerns from where the assessee has admitted to have issued bills regarding bogus accommodation entries of sale. The Department has accepted this explanation of the assessee that the amount deposited in the bank account of the assessee is on account of bogus accommodation sale entries provided by the assessee to various parties and the assessee has earned only commission income on such deposit.
AO as well as the ld. CIT(A) has applied 10% of the total cash deposit as commission income of the assessee by - In the absence of any contrary material the impugned order of the ld. CIT(A) confirmed - Decided against assessee.
-
2020 (11) TMI 855
Addition of loss on derivate transactions - CIT-A deleted addition - HELD THAT:- Assessee had initially taken a loan of US$ 61 Lakhs on 04-12-2007, which got closed on 04- 06-2008 and has resulted in a loss of ₹ 1,77,81,500/- during the AY.2008-09 and again for the AY.2009-10, there was another loan of US$ 61 Lakhs on 05-06-2008 and on the closing date i.e., on 05-12-2008, this has again resulted in a loss of ₹ 16,99,460/-.
CIT(A) has therefore correctly appreciated the facts of the case and has accordingly deleted the addition made by the AO. Ld.DR has not been able to rebut the findings of the CIT(A) with any evidence to the contrary. In view of the same, we see no reason to interfere with the order of the CIT(A) and the appeal of the Revenue is accordingly dismissed.
-
2020 (11) TMI 854
Taxability of long term capital gain arising on sale of depreciable asset at 20% instead of 30% - assessee has not made such claim either in the original return of income or through a revised return of income - HELD THAT:- Assessee did make a claim through submissions that since the asset sold was held for more than three years, the rate of tax as applicable in case of long term capital gain would apply in terms of section 112. Both, the AO and Commissioner (Appeals) have rejected the aforesaid claim of the assessee on the ground that the assessee has not made such claim either in the original return of income or through a revised return of income as provided under section 139(5).
The settled legal position as emerges from the decision of the Hon'ble Supreme Court in Goetz India Ltd. [2006 (3) TMI 75 - SUPREME COURT] and CIT v/s Pruthvi Brokers and Shareholders Pvt. Ltd.[2012 (7) TMI 158 - BOMBAY HIGH COURT] the appellate authority certainly has power and jurisdiction to entertain a fresh claim of the assessee if the relevant fact for deciding such issue are available on record. Therefore, in our considered opinion, Commissioner (Appeals) was not justified in rejecting the claim of the assessee without deciding it on merit. - Grounds raised by the assessee are allowed for statistical purposes.
-
2020 (11) TMI 853
Exemption u/s 10(23C)(vi) denied - assessee trust was not registered under section 12A - HELD THAT:- Since these two appeals are filed by the assessee against the orders of the Assessing Officer in denying benefit of exemption claimed u/s.10(23C) of the Act and the very same matter has been gone back to the file of the Chief Commissioner of Income-tax, Coimbatore for reconsideration, the assessment orders passed by the Assessing Officer consequential to rejection of exemption claimed u/s.10(23C) of the Act cannot survive under the law. Therefore, we are of the considered view that appeals filed by the assessee for assessment years 2010-11 and 2012-13 need to go back to the file of the learned Assessing Officer for re-consideration of the issue after the outcome of the proceedings before the Chief Commissioner of Income-tax, Coimbatore regarding eligibility of the assessee for exemption u/s.10 (23C) of the Act. Hence, we set aside the impugned orders and remit both the appeals back to the file of the Assessing Officer and direct him to redo the assessments in accordance with the law.
-
2020 (11) TMI 852
Disallowance being ten percent of the claim in respect of travel expenditure u/s. 37(1) - expenditure is not fully supported by proper bills and vouchers and, besides, travel for personal purposes (of the Directors, etc.) could not be ruled out, so that a disallowance, accordingly, at 10% of the claimed sum stands made - HELD THAT:- The primary burden on the assessee afore-stated is for the reason that only it is in the knowledge of the facts of its’ case, and could therefore substantiate/explain the same. But that does not empower the Revenue to impute, without any factual basis, either absence of supporting bills/vouchers or a non-business purpose. It is only when called upon to demonstrate the business purpose of a travel that it could be said that the assessee has, or has not, been able to prove the same, which would, in that case, be a matter of the evidence/s led and explanation/s furnished.
No such exercise has been carried out in the instant case, and the Revenue’s charge is, we are afraid, no more than a bald claim. Why, there is in fact even no claim of the expenditure incurred being at a disproportionate or substantial increase over that incurred under the same head in the past. No wonder the ld. Departmental Representative (DR) was unable to answer any of the queries raised by the Bench in this regard during hearing. No hesitation in directing the deletion of the impugned disallowance, and the assessee succeeds.
Disallowance of expenditure claimed toward vehicle repair & running - HELD THAT:- What is meant thereby is for the personal purposes of the person concerned, so that it becomes an other than business, or non-business expense in the hands of the company claiming the same, disallowable u/s. 37(1) - It is only where the same is contractually provided by the company, and taken into account in computing salary income, i.e., at the perquisite value thereof, of the person/s concerned, that no disallowance on this count, i.e., euphemistically called personal expenditure, could be made in the hands of the employer-company. Revenue is, thus, justified in making a disallowance toward estimated expenditure for such non-business purpose, which, at less than 4% of the total expenditure, seems fairly reasonable, being even otherwise around ₹ 4,000 per month only. No claim of an excess disallowance has in any case been made. The disallowance is, accordingly, upheld, and the assessee fails.
-
2020 (11) TMI 851
Restoration of name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The provision pertaining to the restoration of the name of the Company as provided in Section 252 (3) of Companies Act.
I had gone through the report dated 06.07.2020 submitted by Registrar of Companies in the instant appeal. I have also gone through the latest Balance Sheets and Financial Statements of the Company for the year ending 31st March 2019 and also the Income Tax Return Acknowledgment for the Assessment Year 2019-20. I have given careful consideration to the submission made by the learned counsel for the Appellant in regard to the production of NOC etc.
This Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies, in the certain conditions - The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company’s status from ‘Strike off’ to Active (for e-filing) and to intimate the bankers about restoration of the name of the company so as to defreeze its accounts, provided the Appellant Company produce the documents.
Application allowed.
-
2020 (11) TMI 850
Jurisdiction of the NCLT to hear applications under Section 43 after the approval of the Resolution Plan - Whether an application filed under Section 43 for avoidance of preferential transactions can survive beyond the conclusion of the resolution process and the role of the RP in filing/pursuing such applications?
Structure of the IBC 2016 and Role of Resolution Professionals - HELD THAT:- Under Section 31, if the NCLT is satisfied with the Resolution Plan, it shall approve the same which shall be binding on the Corporate Debtor, all its employees, members, creditors, Central and State Governments, including all local authorities to whom dues may be owed, and all other stakeholders and guarantors. The NCLT has to also satisfy itself that the Resolution Plan has sufficient provisions for its implementation. Once a Resolution Plan is approved, the moratorium order under Section 14 shall cease to have effect and the RP shall forward all the records relating to the CIRP and the Resolution Plan to the Board to be recorded on its database. Thus, the role of a RP comes to an end here.
Applications for Avoidance Transactions - HELD THAT:- Similar is the situation in respect of undervalued transactions, transactions defrauding creditors and extortionate credit transactions. In the present case however, this Court is only concerned with preferential transactions - A perusal of Section 43, would show that not all transactions with related or unrelated parties would fall within this category. The same is limited by time. In relation to a related party, the transaction would be preferential if it has taken place two years before the insolvency commencement date and if it has put such party in a beneficial position as against other creditors, sureties or guarantors. In case of an unrelated party, the period is one year.
Chronology of Events - HELD THAT:- This Court had entertained the writ petition as there were fundamental issues of jurisdiction which were raised by the Petitioner. Vide order dated 23rd August, 2019, parties were directed to seek an adjournment before the NCLT. The said order continues till date - The matter was part-heard, when court hearings had been suspended due to the lockdown caused by pandemic. Thereafter, the matter was reheard in September, 2020. In the meantime, on 26th March, 2020, the erstwhile Corporate Debtor, now managed by Tata Steel Ltd – i.e. Tata Steel BSL Ltd. informed the Petitioner that the contract between them expired on 31st March, 2020 and would not be renewed.
Findings and Conclusions - HELD THAT:- While the IBC itself does not fix any time limits for filing of avoidance applications in respect of any transactions, the 2016 CIRP Regulations in Chapter X clearly stipulate the structure and methodology for dealing with objectionable transactions. Under Regulation 35A, as amended with effect from 3rd July, 2018, a specific timeline has been provided, by which the RP has to form an opinion if the Corporate Debtor has been subjected to any of the objectionable transactions. The time limit prescribed earlier was 105 days from the insolvency commencement date, which has now been reduced to the 75th day from the insolvency commencement date - A conjoint analysis of Sections 43 and 44 read with the applicable Regulations clearly shows that the assessment by the RP of the objectionable transactions including preferential transactions cannot be an unending process. The examination has to commence on the insolvency commencement date. The RP has to form an opinion by the 105th day (pre-amendment) and 75th day (post-amendment). If the RP comes to the conclusion that the Corporate Debtor has been subject to preferential transactions, the determination has to be made by the 115th day. The RP also has to apply to the NCLT for appropriate relief on or before the 135th day.
RP cannot continue to file applications in an indefinite manner even after the approval of a Resolution Plan under Section 31. The role of a RP is finite in nature. He or she cannot continue to act on behalf of the Corporate Debtor once the Plan is approved and the new management takes over. To continue a RP indefinitely even beyond the approval of the Resolution Plan would be contrary to the purpose and intent behind appointment of a RP. The Resolution Professional (RP), as the name itself suggests has to be a person who would enable the resolution. The role of the RP is not adjudicatory but administrative in nature. Thus, the RP cannot continue beyond an order under Section 31 of the IBC, as the CIRP comes to an end with a successful Resolution Plan having been approved. This is however subject to any clause in the Resolution Plan to the contrary, permitting the RP to function for any specific purpose beyond the approval of the Resolution Plan. In the present case, no such clause has been shown to exist.
The Resolution Applicant whose Resolution Plan is approved itself cannot file an avoidance application. The purpose is clear from this itself i.e., that the avoidance applications are neither for the benefit of the Resolution Applicants nor for the company after the resolution is complete. It is for the benefit of the Corporate Debtor and the CoC of the Corporate Debtor. The RP whose mandate has ended cannot indirectly seek to give a benefit to the Corporate Debtor, who is now under the control of the new management/Resolution Applicant, by pursuing such an application. The ultimate purpose is that any benefit from a preferential transaction should be given to the Corporate Debtor prior to the submission of bids and not thereafter.
The fact that the new management can take a decision in respect of any agreement which is deemed to be not beneficial to it also supports the interpretation that after the Plan is approved, the company is completely in the hands of the new management and neither the NCLT nor the RP has any right or power in respect of the said company. As can be seen in the present case, the Corporate Debtor in its new avatar has terminated the agreement with the Petitioner.
The above discussion is only in the context of Resolution processes and would however not apply in case of liquidation proceedings. In the case of a liquidation process, the situation may be different inasmuch as the liquidator may be able to take over and prosecute applications for avoidance of objectionable transactions. The benefit of orders passed in respect of such transactions may be passed on to the Corporate Debtor which may assist in liquidating the company at the final stage. However, that is not the case in the present petition.
The order of the NCLT impleading the Petitioner and any consequential orders are liable to be set aside - Petition allowed.
-
2020 (11) TMI 849
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - default made by employees of Operational Creditor - existence of debt and dispute or not - HELD THAT:- The intent of Legislature is very vital for interpreting any law, which can be well deduced from the words of Section 8(2)(a) of I&B Code ‘existence of a dispute if any’. It can be easily inferred that dispute shall not be limited to instances specified in the definition as provided under Section 5(6), as it has far arms, apart from pending Suit or Arbitration as provided Under Section 5(6) of IBC. The IBC is not a substitute for a recovery forum - Section 9 of the IBC makes it very clear for the Adjudicating Authority to admit the application “if no notice of dispute is received by the Operational Creditor and there is no record of the dispute in the information utility.” Whereas, on the other hand, Section 9 also states that the Adjudicating Authority to reject the application so filed “if the Operational Creditor has received a notice of a dispute from the Corporate Debtor”.
The Operational Creditor cannot take recourse that the payment if any made to the employees were in their personal capacity and not on account of Operational Creditor. As it is a well settled principle under Law of Agency that “where an employee does some wrongful act, within the course of his employment, then for that act the employer’s liability shall arise. The employee would be liable for the wrongful act he has done, whereas the employer would be liable vicariously for the act due to the principal-agent relationship between the two. In that situation, the aggrieved person is at the choice whether to sue principal or agent or both. Therefore, fraud committed by any of the employees of the Operational Creditor cannot be said to be done in their personal capacity.
The Operational Creditor has admitted before the Adjudicating Authority that the Corporate Debtor have made the payment of ₹ 14,17,000/-, saying that those payments were towards the out of pocket expenses incurred during the process of custom clearing of Corporate Debtor’s goods - since there was a dispute existing prior to the issuance of Section 8 notice, the insolvency provisions cannot be invoked - Application admitted.
-
2020 (11) TMI 848
Approval of Resolution plan - Whether a third party company, i.e. Facor Power Limited (FPL) can be dealt with in a Resolution Plan under corporate insolvency resolution process against the Corporate Debtor 'Ferro Alloys Corporation Limited' (FACL)? - HELD THAT:- The Resolution Professional submits that in accordance with Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulation 2016, (in short CIRP Regulation), two independent valuers were appointed to conduct a valuation of the assets of the Corporate Debtor (including the shares held by the Corporate Debtor in FPL), in order to arrive at the fair value and liquidation value of the Corporate Debtor. Further, a detailed presentation on the Valuation Report was duly discussed with the Members of the erstwhile COC of the Corporate Debtor on 11th November 2019, i.e. before voting on the Resolution Plan took place. It is also important to observe that out of the average liquidation value of ₹ 305 Crores, approximately one-third value i.e. ₹ 95 Crores is attributable to the shareholding of the Corporate Debtor in FPL - thus, it is clear that objection regarding the valuation of shares of Facor Power Ltd (FPL) is also not sustainable.
It is pertinent to mention that the shareholding pattern in any company demonstrates the extent of control that a shareholder has and can exercise over the said Company. Hence, even in the absence of such an express provision in Resolution Plan, the Resolution Applicant after taking over the Corporate Debtor is entitled to exercise its right over its subsidiary company - the Appellant’s objection regarding the inclusion of the subsidiary company of the Corporate Debtor in the Resolution Plan is not sustainable.
Whether the Adjudicating Authority can approve a Resolution Plan which is discriminatory and gives differential treatment amongst the same Class of the Financial Creditors, merely based on assenting or dissenting Financial Creditors? - HELD THAT:- The Amendment to Regulation 38(1) of CIRP Regulations mandates priority in payment to dissenting Financial Creditors. This amendment came into effect on 27th November 2019, i.e. post the approval of Resolution Plan by the erstwhile COC of the Corporate Debtor. Therefore, as on the date of approval of the Resolution Plan by the erstwhile COC, the only requirement under the provision of the Code qua the dissenting Financial Creditors was the payment of the minimum liquidation value, which is duly complied in the present Case - It is settled position in Law that provisions in a Statute would operate prospectively unless the retrospective operation is expressly provided for. There being no clarification provided to that effect, the amended Regulation 38 cannot be said to have retrospective application.
The approved Resolution does not give differential treatment among the same Class of Financial Creditors merely based on assenting or dissenting Financial Creditors. Thus, the approved Resolution Plan is not discriminatory.
Whether approved Resolution Plan filed by Sterlite Power Transmission Limited is violative of Section 30(2) of the I&B Code, 2016? - HELD THAT:- The legal position is well settled that an approved Resolution Plan can deal with the related party claim and extinguish the same which shall ensure that the Successful Resolution Applicant can take over the Corporate Debtor on a clean slate. The related Parties are being kept out to ensure continuity of operation of both FACL and FPL following the provisions of the Code. There are also no substance based on which it can be inferred that the Resolution Plan is not in conformity with the provisions of Code as provided under Sec 30(2) of the Insolvency and Bankruptcy Code, 2016.
Appeal dismissed.
-
2020 (11) TMI 847
Liquidation of Corporate Debtor - section 33 & 34 of the Insolvency and Bankruptcy Code, 2016 - exemption of Lockdown period from the filling of the instant application - HELD THAT:- It is found that there is no possibility of receiving any Resolution Plan. Therefore, the CoC has resolved for liquidation of the Corporate Debtor vide its Sixth meeting dated 17.02.2020. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC as observed in K. Sasidhar's case [2019 (11) TMI 731 - SUPREME COURT].
The Adjudicating Authority passes an order for initiation of liquidation of the Corporate Debtor viz., Neuromed Imaging Centre Private Limited - Application allowed.
-
2020 (11) TMI 846
Inclusion of name of applicant in the CoC - related party or not - Applicant states that the Respondent/IRP acted in violation of the well established principles of the judicial process - whether this Deed of Assignment was entered to keep bunch of their men in the CoC? - HELD THAT:- The Corporate Debtor was already a sinking ship in a very deep financial crisis. At that point of time, the loan was assigned to the Applicant may be with a foresight to put their men in the CoC Meeting. However, the decision of the Respondent/IRP that Applicant is a "Related Party" is not challenged in this application.
The Applicant states that during the meeting of committee of creditors a biased opinion was formed by the Financial Creditors and the creditors alleged that Gita Power is a "Related Party" of the Corporate Debtor. Therefore, the Applicant being an assignee of Gita Power is Financial Creditor under the IBC, 2016.
As to the present case, it is seen that the Applicant was the Assignee of a loan from the Related Party of the Corporate Debtor and by following the principles laid down in the Judgment of the Hon'ble NCLAT, in Pankaj Yadav & Anr. [2018 (9) TMI 1223 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] as enumerated in para 7, the rights of the 'Assignee' are no better than those of the 'Assignor', the Applicant is stepping into the shoes of the Assignor and thereby takes over the right of the Assignor with the onerous crown, which also includes the disadvantage as found in the Assignment Agreement. Thus, if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon'ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor.
This Tribunal is of the considered view that the Applicant being Assignee of the Loan from the Assignor, is also a Related Party of the Corporate Debtor and as such the Application as filed by the Applicant is liable to the dismissed - Application dismissed.
............
|
9911796707
