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Showing 321 to 340 of 1551 Records
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2024 (2) TMI 1231
Unexplained cash credit u/s 68 r.w.s 115BBE - inflated sales pursuant to demonetization - HELD THAT:- Merely because there was a minor variation in the cash sales during the alleged period compared to previous year would not mean that the assessee has inflated its sales to cover up demonetized currency.
During the year under consideration, diwali was on 31.10.2016 and it is common knowledge that in our society, festival runs 15 days after diwali and it is also a common fact that once the demonization was declared by the Hon'ble Prime Minister, there was frenzy in the market and people were purchasing goods they never intended to purchase just to get rid of demonetized currency.
For the sake of repetition, the assessee had furnished month-wise purchases, month-wise details, stock register, valuation of closing stock, month wise details of cash sales, copies of VAT returns and not a single defect has been pointed out by the Assessing Officer in these clinching evidences.
Since the cash sales have already been offered as income, the same cannot be taxed in the garb of inflation sales to cover up demonetization currency.
Allegation of non-mentioning of names of the purchasers - It is not only baseless but without any backing of law as the assessee is not required to keep the names of purchasers for cash sales less than Rs. 2 lakhs and not even one instance has been pointed out by the Assessing Officer where cash sales were more than Rs. 2 lakhs.
No merit in the impugned addition made by the AO and also we do not find any merit in the part relief given by the ld. CIT(A). Therefore, we direct the AO to delete the addition - Accordingly, Ground No. 2 with all its sub-grounds is allowed.
Disallowance on account of business promotion - HELD THAT:- On perusal of record, we find that business promotion expenses include amount incurred on providing free gifts to customers on purchase of large amount of jewellery items as it is general practice in this line of trade. It is a settled proposition of law that the Assessing Officer should not decide how a business man should do his business.
Moreover, all the expenses are supported by bills and vouchers, duly recorded in the books of account. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 3 is dismissed.
Addition on account of depreciation and car running expenses - HELD THAT:- After considering the facts, we are of the considered opinion that depreciation is a statutory allowance available to the assessee and this is not the first year of claim. Therefore, we do not find any merit in the disallowance of depreciation.
Car running expenses are fully supported by bills and vouchers and are incurred towards petrol and regular repair and maintenance of the cars used including insurance premium. We do not find any merit in the disallowance and the ld. CIT(A) has rightly deleted the same, which calls for no interference.
Unaccounted stock due to difference in valuation of closing stock - typographical error occurred in the figure of stock details of gold bar as mentioned in the tax audit report which was without decimal point - HELD THAT:- The quantitative figures of purchases, consumption and sales of gold bars were mentioned without the decimal point in the tax audit report, due to which the quantity of closing stock of gold bars differed from the actual quantity of closing stock of gold bars appearing in the books of account.
Non-mentioning of decimal value of gold was determined at Rs. 2813.95 crores, which has resulted into an absurd figure. The ld. CIT(A), after appreciating typographical error and after considering reconciliation, deleted the impugned addition. We do not find any error or infirmity in the factual findings of the ld. CIT(A). Accordingly, Ground No. 5 raised by the Revenue stands dismissed.
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2024 (2) TMI 1230
Addition u/s 68 r.w. section 115BBE - unexplained cash deposits in the bank account - CIT(A) confirmed addition without disturbing the book results - HELD THAT:- AO did not accept the source of cash deposited in the month of October to November, 2016 on the basis that there was no historical basis for such deposits. Admittedly, the accounts of the assessee have been accepted by the lower authorities.
CIT(A) has confirmed the finding of the AO without disturbing the book results. Under these facts and circumstances of the case, it can be safely inferred that the AO has accepted the sales of the assessee. The natural corollary would be that AO accepted the sales made in cash also. Hence, the source of cash deposits ought to have been treated as explained. AO has not commented on purchases. Undisputedly manufacturing and trading activity would be based on sale and purchase. If the purchases are treated as genuine and stock is also accepted then treating the sales as bogus is not logical.
CIT(A) did not advert to submission that no error was found in the stock of the assessee. Once the assessee has recorded the sales in its books and there is no adverse finding qua stock and purchases are made. In my considered view, invoking the provision of section 68 would not be justified. It is not case of inflated purchases but AO treated cash sales being bogus without disturbing the book results.
We therefore, hold that authorities below have committed error in making impugned addition without bringing any adverse material in respect of purchases and stock of assessee. Appeal of the assessee is allowed.
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2024 (2) TMI 1229
Revision u/s 263 - 56(2)(x)(c)(B) - FMV purchases exceeds the price of shares - Possibility of two views - PCIT observed that as per the provision of Section 56(2) (x)(c)(B) where a person received any previous year, any property other than immovable property the aggregate fair market value of such property has exceed the purchase consideration is liable to be included in the income of the assessee as income from other source
HELD THAT:- The option to adopt either NAV or DCF Method for valuing the shares has been given to an Assessee in the statute itself. When the A.O. has appreciated this option availed by the Assessee, his order cannot be construed as erroneous.
From the above, it is observed that it is not a case wherein the Assessing Officer failed to conduct enquiry rather it is the case wherein the AO has conducted an elaborate enquiry and adopted one of the two views which was plausible view. The question would be as to whether in such circumstances the power u/s 263 of the Act would be invoked or not. The above said question is no longer res-integra and the said issue is well settled in several decisions.
Further, the Hon’ble Supreme Court in the case of Pr. CIT vs. Canara Bank Securities Ltd [2019 (10) TMI 1512 - SC ORDER] dismissed the Department’s appeal affirming the view taken by the Bombay High Court [2019 (2) TMI 2020 - BOMBAY HIGH COURT] wherein the High Court held that the question whether the income should be taxed as business income or has arisen from other source was a debatable issue and the Assessing Officer had taken the plausible view that it was a business income after due enquiries and therefore not open for the Commissioner to take such an order in revision. .
Therefore, following the ratio laid down in Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] we are of the considered opinion that the impugned order of the Ld. PCIT is found to be erroneous, accordingly, order impugned of the Ld. PCIT is hereby quashed.Appeal filed by the Assessee is allowed.
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2024 (2) TMI 1228
Disallowance u/s 14A - Expenditure incurred on earning exempt income - exempt income earned or not? - HELD THAT:-There was no exempt income was earned during the year, THUS in the absence of exempt income, no disallowance u/s 14A can be made, we find merit on the Ground No. 1.
MAT computation - adjustment of rent/lease equalization reserve u/s 115JB of the Act - HELD THAT:- As in the case of CIT Vs. ICIC Venture Funds Management Company Ltd. [2015 (1) TMI 1504 - KARNATAKA HIGH COURT] held that lease equalization charges are not covered under any of the Clauses Explanation to Section 115JA (2). Also see M/S. MGF INDIA LTD. [2018 (2) TMI 1535 - DELHI HIGH COURT]
Lease equalization charges are not to be treated as adjustments needing to be added back while computing book profits, u/s 115JA on account of explanation 1, we allow the Ground No. 2.
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2024 (2) TMI 1227
Penalty u/s. 271(1)(c) for under reporting income - defective notice - as alleged AO has failed to identify whether the proceeding was initiated for ‘concealment or for furnishing inaccurate particulars of income’.
HELD THAT:- The charge framed by AO to reach at a satisfaction that there is under reporting but not for, either concealment of income or furnishing of inaccurate particulars of income. The argument made by the ld. Senior DR that this is only a terminology to denote concealment, cannot be accepted because the legislature in its wisdom has made amendment in the provisions and instead of provisions of section 271(1)(c) of the Act, now brought in the statute book the provision of section 270A of the Act as introduced by the Finance Act, 2016 w.e.f. 01.04.2017 and applicable for and from 2017-18 i.e., penalty for underreporting or misreporting of income. It means that the AO has not at all applied his mind while initiating penalty and the specific charge is not framed for initiating penalty and hence, the argument of Senior DR that the notice issued u/s. 274 or show-cause notice u/s. 274 of the Act is not a statutory notice but it is a printed format. We cannot agree with the argument of the ld. Senior DR
AO has not at all applied his mind or he is in a confused state of mind for that the penalty u/s. 271(1)(c) of the Act for concealment of income or may be furnishing of inaccurate particulars of income because no case is made out for that. Hence, we delete the penalty in all these assessment years. Decided in favour of assessee.
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2024 (2) TMI 1226
Revision u/s 263 - unexplained cash deposits - As per CIT cash deposits in the bank account of the assessee not having been examined by the AO with respect to its source - HELD THAT:- As the assessee had furnished an explanation regarding the source of cash deposit of Rs. 30 lakhs as being out of opening cash balance and out of cash withdrawals made in the month of April and May 2016, evidenced with necessary documentary evidences.
What transpires thereafter from the order of the ld. PCIT is that he inferred that the Assessing Officer could not have been satisfied with the reply of the assessee and was not satisfied with the reply of the assessee, but by mistake had failed to make addition on account of this cash deposits
AO’s view of the cash deposits being duly explained not being a plausible view - We are unable to agree with the above findings of the ld. PCIT. That there were sufficient cash withdrawals for the deposits of Rs. 30 lakhs is not disputed. The judicial view in such circumstances has consistently been that where the cash deposits is explained out of cash withdrawals and there is no case of the Revenue of the cash withdrawn as having been utilized elsewhere, there is no reason for doubting the explanation of the assessee. It is not the case of the ld. PCIT that the cash withdrawn has been utilized elsewhere. Therefore, the acceptance of the explanation offered by the assessee to the Assessing Officer cannot be faulted or for that matter doubted.
Onus of explaining the source of cash deposits was not discharged by the assessee - We are not in agreement with the same. The ld. PCIT has himself noted the deposits to have been made by banking channels. There arises, therefore, no question of any doubt regarding their sources which is through transparent sources only. Even otherwise, we failed to understand how the source of these deposits would in any way affect the genuineness of their withdrawals and subsequent re-deposits. Neither has the ld. PCIT demonstrated as to how the source of these deposits effect the genuineness of the subsequent deposits. Therefore, we are not in agreement with this finding of the ld. PCIT.
AO by mistake failed to make this addition - There is no basis we find for the same. The assessment order has to be read as it is and there is no scope for drawing any inference or reading between the lines of an assessment order. Once an issue has been shown to be examined during the assessment proceedings and the assessment order does not reveal any addition made on account of the same, it is to be treated as having been accepted by the AO. Nothing can be added or subtracted from a detailed assessment order passed. Further, if it was a mistake by the AO and not having made addition of Rs. 30 lakhs, the AO could very well have exercised his power of rectification of mistake u/s 154 of the Act which has not been done in the present case.
Thus we hold that the issue of cash deposits has been duly examined during the assessment proceedings and the AO has arrived at a plausible view of the source of the same having been duly explained from cash withdrawals and opening cash balance duly evidenced with documents, and there is, therefore, we hold that that no error in the assessment order - Decided in favour of assessee.
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2024 (2) TMI 1225
Deduction u/s 80-IA - contracts entered with non- government entities - admission of additional evidences submitted by the assessee - HELD THAT:- As we have admitted the additional evidences, without going into the merits of the additional evidences, we restore the issue before the learned CIT (A) to examine these evidences and decide the issue of allowability of claim of deduction u/s 80IA of the Act with respect to the additional evidences. This is also so for the reason that the disallowance is confirmed for one of the reasons being non-production of the contracts.
Disallowance u/s 36(1)(va) - delay in depositing employee’s contribution beyond the due dates prescribed under the respective Act - HELD THAT:- This ground is already decided by the learned CIT (A) against the assessee relying on the decision of the Hon'ble Supreme Court in CHECKMATE SERVICES P. LTD.[2022 (10) TMI 617 - SUPREME COURT]. In absence of any argument by the learned Authorized Representative, same is dismissed.
Levy of Dividend distribution tax (DDT) at the rate of 20.36% u/s 115O - claim of assessee that it should have been levied at the rate of 15% in terms of Article 10 of DTAA between India and Thailand - HELD THAT:- As AR fairly admitted that this issue is decided against the assessee by the Special Bench in case of Total Oil Limited [2023 (4) TMI 988 - ITAT MUMBAI (SB)] where it is held that dividend distribution tax is an additional tax charged on the distributed profits of the company and not on the shareholder. The learned Departmental Representative also agreed with the same.
As decision of Total oil Limited [SB] has held that shareholders have nothing to do with the levy of DDT on distributed profits of the company. List of shareholders, their beneficial interest in the dividend and residential status of the shareholder as per DTAA are not produced before us. It has also not been established before us that even otherwise the claim is in time or not and further whether the sources country [India] has to cede its right of taxation or not. Therefore, all these issues remain unexamined at all stages.
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2024 (2) TMI 1224
Additions towards cash deposits u/s. 69A r.w.s. 115BBE in demonetized currency - Addition based on report received from the ADIT (Investigation), Trichy - HELD THAT:- Since, the assessee could able to furnish necessary evidences, including cash book, sales bills and also explained source for cash deposits into bank account in new currency notes, in our considered view, AO is completely erred in making addition towards balance cash deposits u/s. 69A of the Act.
Sole basis for the AO to reject cash book filed by the assessee during the course of assessment proceedings, is difference in opening cash in hand as on 27.11.2016 in the cash book maintained by the Cashier and cash book submitted by the assessee during the course of assessment proceedings - Assessee has explained difference in cash balance between two cash books and argued that cash book considered by the Survey Team on 27.11.2016, is a rough cash book maintained by the Cashier at Factory premise, whereas, the cash book submitted by the assessee, is a computer generated cash book which contain total transactions of the assessee. The explanation given by the assessee to explain difference in cash balance as per two cash books is reasonable and acceptable. Decided against revenue.
Estimation of returned income - Since, the sales declared by the assessee to the tune of Rs. 1,10,30,000/- has been excluded and made additions under the head ‘income from other sources’ as unexplained money u/s. 69A of the Act, in our considered view, the cost of purchase to said sales also needs to be excluded. If you exclude sales and corresponding cost of sales from the net profit declared by the assessee, the net profit computed by the CIT(A) by excluding a sum of Rs. 83,94,933/- from net profit declared by the assessee at Rs. 1,98,55,779/-, in our considered view, the net profit computed by the CIT(A) at Rs. 1,14,60,846/- is in accordance with accepted principles of accounting.
Therefore, no error in the findings recorded by the CIT(A) to re-compute net profit from business and to be taxable under normal rate of tax, and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue.
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2024 (2) TMI 1223
Disallowance u/s 14A r.w.r. 8D - Addition of interest expenditure - assessee has earned exempt income by way of dividend - assessee did not make any suo motu disallowance under section 14A read with Rule 8D - HELD THAT:- When the AO called upon the assessee to explain, why the disallowance u/s 14A r.w.r. 8D should not be made, the submissions of the assessee was that the investments made in subsidiaries and joint ventures are in the nature of strategic investments and not with an intendment to earn exempt income. On a perusal of assessment order, it is very much clear that the AO has recorded reasons/satisfaction, why assessee’s explanation is not acceptable and disallowance has to be made under section 14A read with Rule 8D.
As fairly well settled that strategic investment in group entities cannot escape the rigours of section 14A read with Rule 8D. It is not a case where the assessee has made any suo motu disallowance, which could have shifted the burden to the AO to record satisfaction to establish that the disallowance made by the assessee is incorrect, having regard to the entries made in the books of account.
Therefore, decision in case of Coforge Ltd [2021 (7) TMI 346 - DELHI HIGH COURT] would not be apply to the facts of the present appeal. Thus, we are unable to accept assessee’s contention that the AO has not recorded any satisfaction, which invalidates the disallowance u/s 14A read with Rule 8D. We find substantial merit in the alternative contention of learned counsel for the assessee that the disallowance under Rule 8D(2)(iii) should be computed with reference to investments giving rise to exempt income during the year and not the entire investment, which might give rise to exempt income in further. AO is directed to recompute the disallowance under Rule 8D(2)(ii) accordingly. Grounds are partly allowed.
Disallowance of depreciation on leasehold property claimed as amortization - HELD THAT:- We find, while deciding identical issue in assessee’s case in as held as unable to appreciate arguments advanced by that these advances paid are towards advance rent. Even from the terms of agreements, it is not clear as to whether advances paid has been adjusted against future rent or whether these are in the nature of security deposits which are refundable in nature on termination of agreements.
Both parties before us have expressed their intention regarding issue being re-adjudicated by assessing officer de novo. Accordingly, we are inclined to set aside this issue to Ld. AO for fresh adjudication. Ld. AO shall investigate upon and take all necessary steps to ascertain true nature of alleged lease premium paid by assessee in the three agreement made as per law. Thus restore the issue to the Assessing Officer for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
Disallowance towards static creditors - Commissioner (Appeals), having factually verified that certain creditors have been written off and amounts have been added back to the income in subsequent years and in respect of certain creditors payments have been made, deleted the addition - HELD THAT:- Before us, learned Departmental Representative has failed to bring any material on record to controvert the aforesaid factual finding of learned first appellant authority. That being the case, we decline to interfere with the decision of learned first appellate authority. Ground raised is dismissed.
TDS u/s 194J - Disallowance u/s 40(a)(ia) - assessee has paid custody and listing fees to NSE, BSE, NSDL and CDSL - HELD THAT:- The issue is squarely covered by the decision of the Tribunal in assessee’s own case in assessment years 2010-11 to 2012-13 wherein the Hon’ble Supreme Court concluded that transaction charges paid to BSE by its members does not fall under the category of technical services, and therefore, no TDS is following the ratio laid down by the Hon’ble Apex Court in the case of CIT Vs. Kotak Securities [2016 (3) TMI 1026 - SUPREME COURT] we hold that the aforesaid nature of payment does not fall within the category of Technical and Managerial fee and accordingly assessee was not required to deduct TDS u/s. 194J.
Disallowance on delayed payment of employees contribution to Provident Fund (PF) and Employees State Insurance - HELD THAT:- As fairly submitted by learned counsel appearing for the assessee, the issue is squarely covered against the assessee in view of the decision of Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] - Thus, following the ratio laid down by Hon’ble Supreme Court in the aforesaid decision, we uphold the disallowance made by the Assessing Officer.
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2024 (2) TMI 1222
Assessment of trust - addition made u/s 115BBC on account of anonymous donations - AO has disallowed the donations of more than Rs. 50,000/- for want of PAN and Bank account statements of donors - HELD THAT:- As it is clear from section 115BBC(3) that the statute does not require the assessee to keep PAN and bank account statement of the donors but requires only maintaining record of identity indicating name and address of the person making contribution/donation.
In the case in hand the assessee has furnished the list of donors giving name and address but the AO was not satisfied with the detail furnished by the assessee and asked the assessee to furnish the PAN and bank account statement of the some of the donors where the assessee has not furnished.
Thus when section 115BBC(3) does not require specific documents to be maintained by the assessee except maintaining record of identity maintaining name and address then the addition made by the AO is not in accordance with the provisions of section 115BBC of the Act. Thus the addition made by the AO is not sustainable and the same is deleted.- Decided in favour of assessee.
Addition u/s 68 on account of unsecured loans - consequential denial of benefit of section 11 - assessee has now contended that entire receipt including the loan in question has been applied for charitable purpose and therefore, no addition can be made on account of unsecured loans - HELD THAT:- As we note that the authorities below have not considered this aspect of the matter as to whether the assessee has applied this amount of loan for charitable purpose and consequently the benefit of section 11 would be available to the assessee of not.
Thus we set aside this issue to the record of the AO for proper verification of the relevant fact regarding the utilization of the loan amount as well as details and evidences to be produced by the assessee to satisfy the identity and creditworthiness of the creditors as well as genuineness of the transactions. Decided in favour of assessee for statistical purposes.
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2024 (2) TMI 1221
TDS u/s 194I and 194A - non deduction of TDS payment to New Okhla Industrial Development Authority (“NOIDA”) on account of lease rent and on account of interest on lease rent - HELD THAT:- We observe that the same issue came up for consideration before the Co-ordinate Bench of the Tribunal in own case for AY 2011-12 to 2014-15 which followed the decision of Rajesh Projects (India) Pvt. Ltd.[2017 (2) TMI 1109 - DELHI HIGH COURT] of which decision, in turn, has been affirmed by Supreme Court in New Okhla Industrial Development Authority . [2018 (8) TMI 1374 - SUPREME COURT] as directed that where result of the amounts have been paid by the petitioners, towards TDS as o coercive process used by the Revenue, the GNOIDA shall make appropri orders to credit/reimburse such payments. It is clarified that GNOIDA shall ensure that reimbursement is made to compensate the petitioners' excess payments; the income tax authorities shall not pursue any coercive methods for recovery of the amounts, or penalty, once the basic liability (with interest, to be paid by GNOIDA) is satisfied. The impugned orders are quashed; the Revenue shall make consequential orders, to give effect to this judgment, after duly hearing the petitioners and those likely to be affected, within 12 weeks from today.
Respectfully following the decision of Tribunal (supra), we set aside the matter and restore it to the file of the Ld. AO to follow the directions of the Hon’ble Delhi High Court in the decision (supra) and decide it afresh in the light thereof.
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2024 (2) TMI 1220
Provisional Release of seized of vehicle - Vehicle sold by the diplomat in breach of conditions of import - bona fide purchaser - liability of paying the entire differential duty and executing a bank guarantee - HELD THAT:- Since the importer appears to be from the Embassy of the Lao People's Democratic Republic, and is currently not in India, it is highly unlikely that the Customs Department would be in a position to recover the duty from the original importer. In those circumstances, I am not inclined to accede to the request that the petitioner be permitted provisional release against payment of 50% duty. At the same time, it appears prima facie that the petitioner was a bona fide purchaser who purchased the vehicle not directly from the diplomat who imported it, but after it was transferred to other individuals in India. In those circumstances, it would be onerous and unreasonable to impose the requirement of the execution of a bank guarantee for a sum of Rupees one crore.
Thus, W.P. is disposed of by modifying the conditions imposed under the impugned order by deleting the requirement under serial No.3 thereof pertaining to the provision of a bank guarantee for a sum of Rupees one crore. Subject to fulfilment of the two subsisting conditions in the impugned order, the vehicle shall be provisionally released within a period of one week.
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2024 (2) TMI 1219
Approval of Resolution Plan - homebuyers are waiting their units to be given possession for the last several years and by appeal filed by promoters/directors, process is being delayed.
First judgment delivered by the Hon’ble Supreme Court in respect to CIRP of the Corporate Debtor is the Judgment of the Hon’ble Supreme Court in Chitra Sharma Vs. Union of India [2018 (8) TMI 661 - SUPREME COURT] - HELD THAT:- In this case, Hon’ble Supreme Court exercised its jurisdiction under Article 142 in reviving the CIRP of the Corporate Debtor.
Judgment of the Hon’ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank [2019 (11) TMI 316 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment - Another direction issued in the above case was that the IRP to complete the CIRP process within 90 days and it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively who were finally bidders and had submitted resolution plan on the earlier occasion.
Judgment of Hon’ble Supreme Court in Jaypee Infratech Limited Vs. Axis Bank Ltd. [2020 (2) TMI 1259 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed.
After noticing the Judgments of the Hon’ble Supreme Court which was delivered in the CIRP of the Corporate Debtor and certain background facts, now the question which have been framed are now considered.
Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? - HELD THAT:- The main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority against the resolution plan and their objections were heard on merits, promoter and director was also impleaded as one of the parties in appeal of NBCC, objections of appellants were also noticed by Hon’ble Supreme Court in earlier round of litigation that is while deciding Jaypee Kensington Case [2021 (3) TMI 1143 - SUPREME COURT] - the appeals of appellant cannot be thrown out on the ground of locus. The limited ground to challenge approval of the resolution plan is that the same is not in conformity with Section 30(2) - the objection of the respondent on the locus is rejected and it is proceeded to examine the submissions raised by the Appellant.
Whether the treatment of Income Tax dues in the Resolution Plan where they have been treated as Operational Creditor and offered only Rs. 10 Lacs violates the provision of sub-section (2) of Section 30? - HELD THAT:- The income tax department has itself filed an appeal being C.A.(AT) Ins. No. 549 of 2023 which has been decided on 26.09.2023 where this Tribunal came to the conclusion that there is no violation of provision of Section 30(2)(b) in so far as treatment of the claim of the income tax department is concerned and the order of the Adjudicating Authority not being interfered with in the Appeal, Appellant is not entitled to raise any further issues regarding the dues of the income tax department which has been concluded in the Appeal filed by the Income Tax Department itself. This Tribunal having held that there is no non-compliance of section 30(2)(b) with regard to treatment of claim of the income tax department who is operational creditor, we cannot accept the submission of the Appellant that there is any violation of section 30(2) of the Code with respect to claim of income tax department - there is no violation of provisions of subsection (2) of Section 30 of the Code with regard to dues of the Income Tax Department.
Whether the treatment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? - Whether YEIDA is a Secured Creditor of the Corporate Debtor? - HELD THAT:- The issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised - the issues raised by the Appellant need to be examined and considered in the appeal filed by YEIDA and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly.
Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? - HELD THAT:- In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist. In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC - Clause 34.50 is already noticed which expressly takes away the right of subrogation to the Guarantors. The Hon’ble Supreme Court had occasion to consider the right to Guarantors consequent to approval of Resolution Plan in IBC in Lalit Kumar Jain vs. Union of India, [2021 (5) TMI 743 - SUPREME COURT]. Submission was advanced before the Hon’ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities - The Hon’ble Supreme Court noted relevant provisions of the Contract Act including Section 141 of the Contract Act. The Hon’ble Supreme Court laid down that approval of Resolution Plan and finality imparted to it does not per se operate as a discharge of the guarantor’s liability.
The law is thus well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished. The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan - there are no substance in submission of the Appellant that debt is extinguished under Section 135 and they have right of subrogation under Section 140 and to receive provision of securities under Section 141, cannot be accepted.
Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? - Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory authority as has been directed in the impugned order, which is impermissible? - HELD THAT:- The SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression “as applicable under the prevailing laws” clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit - The above direction is only to relevant RERA Authority to expeditiously make the appropriate changes in its records qua Projects, in accordance with the Resolution Plan. The said action is necessary consequence to the approval of Resolution Plan. The SRA is not asking any direction which is in violation of any applicable law. Thus, there is no error in granting the above relief by the Adjudicating Authority.
The Successful Resolution Applicant has clearly contemplated that the Successful Resolution Applicant will implement the plan whether or not reliefs and concessions are granted - there are no infirmity in the reliefs and concessions granted by the Adjudicating Authority. As noted above, the fact that certain reliefs and concessions have not been granted could have not adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground.
Whether Resolution Plan take into consideration 758 acres of land which became available to the Corporate Debtor consequent to allowing the avoidance application and subsequent to the judgment of the Hon'ble Supreme Court [2020 (2) TMI 1259 - SUPREME COURT] ? - HELD THAT:- The judgment of Hon’ble Supreme Court in Anuj Jain Vs Axis Bank Ltd. [2020 (2) TMI 1259 - SUPREME COURT] was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon’ble Supreme Court it is noticeable that even in NBCC’s plan relief was sought with regard to 858 acres of land. Both the Resolution Applicants were thus well aware about order of the Hon’ble Supreme Court dated 26.02.2020 and there was no occasion for not including the said land which was available for the kitty of the Corporate Debtor after release of encumbrances - there are no substance in submission of the Appellant that 758 acres of land has not been included in the plan submitted by Suraksha Realty.
Whether applicants who have been permitted to intervene in the appeal are entitled for any relief? - HELD THAT:- It is well settled that interveners by the I.A. cannot claim any relief for themselves. Interveners are either to support the order which is subject matter of challenge or support the Appellant in their challenge. The Applicants who have filed their claims before the IRP and whose claims are reflected are fully entitled to approach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan.
There are no ground in these appeals to interfere with the impugned order dated 07.03.2023 passed by the Adjudicating Authority at the instance of the Appellants - appeal dismissed.
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2024 (2) TMI 1218
Rejection of the application filed by the petitioner, claiming the benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - application rejected, essentially, on the ground that as on the cut-off date, that is, 30.06.2019, the investigation was pending and the amount of duty involved was not quantified - whether the service tax payable by the petitioner had been quantified in terms of Section 121(r) of the Finance Act (No. 2), 2019 prior to 30.06.2019? - HELD THAT:- This Court in HANSUTTAM FINANCE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, GOODS AND SERVICE TAX, DELHI SOUTH COMMISSIONERATE & ORS. [2023 (5) TMI 812 - DELHI HIGH COURT] had analysed the object of the Scheme and held The impugned order rejecting the petitioner’s declaration on the ground that “investigation has not been concluded and hence the demand has not been estimated or concluded on or before the stipulated date” is unsustainable. The Scheme does not exclude taxpayers in respect of whom investigations have not been concluded; it expressly includes taxpayers in respect of whom investigation, enquiry or audit is pending.
This court held that in cases where an inquiry, audit or investigation is pending, the quantification of the tax dues can be ascertained from the written communication. It is not necessary that the written communication, in which the amount of duty payable is quantified must emanate from the concerned tax department. The said amount of tax dues can be ascertained from the written communication emanating from the taxpayer as well subject to the same being part of the record. The unilateral communication, which is disputed and is not accepted by the department, however, cannot be considered as quantification of tax due.
On 15.03.2019, the petitioner had provided the computation sheet which quantified the tax dues payable by the petitioner for the concerned period. In terms of the law laid down by this Court, the said communication qualifies as written communication quantifying the tax dues, albeit emanating from the petitioner. There is no material dispute as to this quantification. The Revenue has, in fact, accepted the calculation of the tax dues furnished by the petitioner. Thus, for the purposes of Section 123(c) read with Section 121(r) of the Act, the tax dues stand quantified in terms of “a written communication of the amount of duty payable under the indirect tax enactment;” as an admission of liability in a written communication for the purpose of Section 123(c) read with Section 121(r) of the Scheme in the Finance Act (No. 2), 2019. This is not a case where the department is not in agreement with the quantification as provided by the petitioner - the demand made in the Show Cause Notice is based on the documents provided by the petitioner, which includes the revised calculations. The said calculations have not been questioned.
The legislative intent underlying the enactment of the Scheme was to include all taxpayers for offloading the baggage of disputes. All taxpayers, except those which were specifically excluded, were entitled to avail the benefit of the said Scheme. The Scheme also covered cases where no disputes were pending and enabled the taxpayers to voluntarily pay taxes and avail amnesty under the Scheme - it is clear that the tax dues had been quantified as required under Section 121(r) of the Finance Act (No. 2), 2019.
The Division Bench of Bombay High Court in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [2020 (10) TMI 1135 - BOMBAY HIGH COURT] had examined the legislative intent of the Scheme and had held that a summary rejection of an application without affording an opportunity of being heard would fall foul of the principles of natural justice.
The respondents are directed to consider the declaration of the petitioner in terms of the Scheme as a valid declaration under the category of “investigation, enquiry and audit” and grant the consequential reliefs to the petitioner. While doing so, the respondents shall provide an opportunity of hearing to the petitioner and thereafter, pass a speaking order with due communication to the petitioner - Petition allowed.
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2024 (2) TMI 1217
Validity of recovery certificate dated 12.6.2019 issued by the respondent No. 3 - refund the amount of advertisement tax paid in advance by the petitioner - HELD THAT:- The interest of justice would be subserved if the interim order dated 05.08.2019 is continued till the disposal of the writ petition. Since the matter is remanded to the High Court, the parties are directed who are represented by their respective counsel to appear before the High Court on 11.03.2024 without expecting any separate notices from the High Court and bring to the notice of the concerned Roster Bench the remand of the matter so that it could be considered and disposed of expeditiously as possible. With the cooperation of the parties it is expected that the High Court will dispose of the matter as expeditiously as possible.
Appeal disposed off.
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2024 (2) TMI 1216
Seeking review - error apparent on the face of record or not - rate of tax on Bar attached Hotels and shops - HELD THAT:- Review jurisdiction is to be exercised in a very limited manner where there is an error apparent on the face of the record. This Court has considered each and every document and the submissions while rendering the Judgment in SREEVALSAM RESIDENCY, M/S. SNEHA REGENCY, A UNIT OF KOLLENGODE HERITAGE HOTELS & TOURISM PVT. LTD., M/S HOTEL JEENA AND UDAYA BAR, HOTEL ZODIAZ INTERNATIONAL, SAMS PROPERTY DEVELOPERS AND HOTELS P LTD, DAHLIA TOURIST HOME, VERSUS STATE OF KERALA, STATE TAX OFFICER, COMMISSIONER, KERALA STATE GST DEPARTMENT, STATE TAX OFFICER (ARREAR RECOVERY) AND OTHERS [2023 (12) TMI 109 - KERALA HIGH COURT]. Furthermore, these documents were not part of the pleadings. Review does not mean rehearing or appeal. There has to be finality to a litigation. This Court, based on the submissions, documents and evidences, has rendered the Judgment sought to be reviewed.
There are no error apparent on the face of the record which warrants this Court to reconsider this Judgment under review. There is no substance in these review petitions - petition dismissed.
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2024 (2) TMI 1215
Maintainability of application filed under Section 95 (1) of the IBC, 2016 - initiation of CIRP against the Respondent/Personal Guarantor - invocation of personal guarantee - issuance of demand notice - HELD THAT:- It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously.
From the report of IRP, it is clear to us that: i. IRP has recommended to accept the application for the reason as stated in the report dated 11.12.2021. ii. The Respondent has admitted to have executed the Guarantee Agreement. iii. The Applicant has demanded the amount outstanding from the Respondent vide Demand Notice dated 22.09.2021. iv. Resolution Professional report states that no evidence was placed before him by the Respondent having paid the amount demanded by the Applicant and as such in overview entire amount demanded is un-serviced as on the date of order. v. The application is not hit by Limitation.
It is directed to initiate Insolvency Resolution Process against the Respondent/Personal Guarantor and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 101 of IBC, 2016 - application filed under Section 95 (1) of the IBC, 2016 is admitted and the Insolvency Resolution Process stands initiated against the Respondent/Personal Guarantor.
Application allowed.
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2024 (2) TMI 1214
Maintainability of appeal - appeal filed by the petitioner dismissed on the ground that the same was time barred as it was filed beyond the period of four months - HELD THAT:- The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. Accordingly, one cannot apply Section 5 of the Limitation Act, 1963 to the aforesaid provision.
In COMMISSIONER OF CUSTOMS & CENTRAL EXCISE VERSUS M/S HONGO INDIA (P) LTD. & ANR. [2009 (3) TMI 31 - SUPREME COURT], the Supreme Court has reiterated its stand and held In the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. The High Court was, therefore, justified in holding that there was no power to condone the delay after expiry of the prescribed period of 180 days.
Thus, no interference is required in this petition and the same is, accordingly, dismissed.
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2024 (2) TMI 1213
Attachment of bank account of the petitioner for realization of due according to the department - order of attachment not served upon - petitioner relies on a downloaded copy of the portal - violation of principles of natural justice - HELD THAT:- The State respondent submits that the aforesaid allegation of the petitioner is not correct and further submits that provisional attachment order in question was uploaded in the official portal of the department and he has produced the downloaded copy of such order.
In such facts and circumstances of this case where disputed question of fact based on material evidence are involved, this writ Court cannot act as an enquiry authority and scrutinize the evidence by the parties with regard to the disputed question of fact about uploading of the attachment order - petition dismissed.
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2024 (2) TMI 1212
Provisional attachment of cash credit accounts of the petitioners - expiry of period of one year from the date it is made - petitioners submits that repeated attachment of cash credit accounts in exercise of power under Section 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken - HELD THAT:- In view of the admitted position that the order, subject matter of these proceedings has ceased to operate, the petition is disposed of reserving the right of the petitioner to impugn the fresh attachment order dated 13.12.2023 in accordance with law. The question of validity of repeated issuance of attachment orders under Section 83 of the CGST Act is left open.
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