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Showing 61 to 80 of 1081 Records
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2021 (5) TMI 1021 - RAJASTHAN HIGH COURT
Faceless assessment done u/s 144B - Learned counsel relies on judgments passed by the High Court of Delhi, Madras and Bombay to submit that the faceless assessment done u/s 144B has been examined by the High Court without insisting upon filing of an appeal which is not only cumbersome but also virtually is in the same prospective as there is no personal hearing provided - Learned counsel further submits that the petitioner-firm has not been given any fair opportunity to put up its submissions and defence while show cause notice was given to the petitioner - HELD THAT:- Issue notice of the writ petition as well as stay application, returnable within eight weeks. Additionally, notices may be served through e-mail also.
In the meanwhile, the effect and operation of assessment order dated 15.04.2021 shall remain stayed.
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2021 (5) TMI 1020 - SECURITIES AND EXCHANGE BOARD OF INDIA
Insider trading - Trading when in possession of unpublished price sensitive information - Noticee No.1 to 4 are alleged to have violated Section 12A(d) and (e) of the SEBI Act, 1992 and Regulations 4(1) read with 4(2) of the PIT Regulations, 2015 by trading in the shares of PC Jeweller when in possession of UPSI-II whereas Noticee No.5, is alleged to have violated Section 12A(e) of the SEBI Act, 1992 and Regulation 3(1) of PIT Regulations, 2015, by communicating UPSI-I and UPSI-II to Noticees No.1 to 4 - Whether there were UPSI-I and UPSI-II, as alleged in the SCNs? - HELD THAT:- As buy-back involves purchasing of its own shares by the company which are extinguished, therefore, consequent to a buy-back by a company, its paid-up capital stands reduced which results into change in capital structure of the company. In terms of Regulation 2(1)(n)(iii) of the PIT Regulations, 2015, information pertaining to change in capital structure of a company is per se treated as UPSI. Thus, in the present case, information pertaining to the decision taken by the board of directors of the Company in its meeting held on May 10, 2018 regarding buy-back of the shares of the Company was a price sensitive information and before its disclosure to the stock exchanges on May 10, 2018 was UPSI-I, as alleged in the SCN. I note that ppreliminary discussion among MD, ED, COO and CFO in relation to the proposal for buyback of fully paid-up equity shares of the Company took place on April 25, 2018. Therefore, I find that UPSI-I came into existence on April 25, 2018. The said information remained UPSI-I till its disclosure to stock exchanges on May 10, 2018. In view of this, I find that the period from April 25 to May 10, 2018 is the period of UPSI-I, as alleged in the SCNs.
Regarding UPSI-II in terms of the disclosure made by the Company on May 10, 2018, the general public was made aware that the Company was going to buy-back upto 1,21,14,285 fully paid-up equity shares of the Company of ₹ 10/- each at a price of ₹ 350/- per equity share which was an unpublished price sensitive information within the meaning of Regulation 2(1)(n)(iii), as discussed in the previous para, as the said information was pertaining to the change in the capital structure of the Company. As the said decision of buy-back of shares by the Company was abandoned by the Company on July 13, 2018 when its board of directors decided to withdraw the buy-back offer, therefore, as a corollary, find that the said information was also an unpublished price sensitive information within the meaning of Regulations 2(1)(n)(iii) of the PIT Regulations, 2015 as being an information pertaining to the change in capital structure of the Company. We find that as mentioned above, the said unpublished price sensitive information which has been identified as UPSI-II in the SCNs, came into existence on July 07, 2018 when the State Bank of India refused to give its NOC to the proposed buy-back of the Company and remained so till it was disclosed to the stock exchanges by the Company on July 13, 2018. Thus, I find that the period from July 07, 2018 to July 13, 2018 is the period of UPSI-II, as alleged in the SCNs. With regards to UPSI-I as well as UPSI-II, I note that the Noticees have not disputed the identification of the said information as unpublished price sensitive information by the SCNs.
Whether Noticees are “insider”, as alleged in the SCNs? - Noticee no. 1 along with Noticee no. 2 and 3 (both of whom traded on behalf of Noticee no. 1) were in the know-how of the events taking place in the Company with regard to the buyback proposal and its withdrawal. Thus, I find that Noticee no. 1, 2 and 3 had possession of UPSI-I and UPSI-II and they were ‘insiders’ in terms of Regulation 2(1)(g)(ii) of PIT Regulations, 2015.
From the nature of transactions between the bank accounts of Noticee No. 3 and Noticee No. 4 and the fund utilisation thereof, coupled with the fact that Noticee no. 3 had placed the orders for the trades of Noticee no. 4 (through stock broker Karvy) during UPSI Period-II, I find that Noticee no. 4 was nothing but a front entity of Noticee no. 3 for trading in the securities market, including trading in the scrip of PC Jeweller. I note that Noticee no. 3 has completely downplayed the aforesaid fund transfers between him and Noticee no. 4, by calling them as an inconsequential and inconclusive evidence. However, from all the attendant facts and circumstances, I find that Noticee no. 4 was a wholly owned and controlled company of Noticee no. 3 and his family and Noticee no. 3 used Noticee no. 4 as a front entity for trading in the securities of PC Jeweller.
The trading pattern and timing of trades of Noticee no. 4, the overarching influence and control of Noticee no. 3 over the affairs of Noticee no. 4, the proximity of Noticee no. 3 to the promoters (Prem Chand Gupta and Noticee no. 5), it is clear that trading by Noticee no. 4 in the futures contracts of PC Jeweller was due to the possession of UPSI-II. Thus, I find that Noticee no. 4 had possession of UPSI-II through Noticee no. 3 and thus, Noticee no. 4 was an ‘insider’ in terms of Regulatio 2(1)(g)(ii) of PIT Regulations, 2015.
We note that Noticee no. 5 was the MD of PC Jeweller. Thus, Noticee no. 5 is a connected person within the meaning of Regulation 2(1)(d)(i) of PIT Regulations, 2015. Therefore, Noticee no. 5 is an insider of PC Jeweller in terms of Reg. 2(1)(g)(i) PIT Regulations, 2015. The chronology of events which has been provided in the SCNs and also reproduced in the pre-paras of this order indicates that Noticee no. 5 was part of all the key discussions and was aware of the developments pertaining to buy-back offer, refusal of NOC from SBI and its subsequent withdrawal of buy-back offer. I also note that Noticee no. 5 has not disputed the findings of the SCNs with respect to the Chronology of Events and thereby, him having possession of UPSI-I as well as UPSI-II. Therefore, I find that Noticee no. 5 is an ‘insider’ in terms of Regulations 2(1)(g)(i) being connected person and Regulation 2(1)(g)(ii) being in possession of UPSI-I and UPSI-II, of PIT Regulations, 2015.
Whether Noticee no. 1 to 4 has traded in the securities of P C Jeweller when in possession UPSI- I and II and Noticee no. 5 communicated UPSI -I and II to Noticee no. 1 to 4, as alleged in the SCNs? - The summary of loss avoided/notional gains made in the trading accounts of Noticee no. 1 and Noticee no. 4 in aggregate (including interest) through trading in the scrip of PC Jeweller while being in possession of UPSI-II amounted to ₹ 6,17,60,184.13 and ₹ 2,13,23,161.64, respectively. I note that aforesaid amount has been impounded by SEBI by virtue of the Impounding Order. I also note that said Noticees i.e. Noticee no. 1, 2, 3 and 4 have not disputed the method used or the formula adopted for arriving at the aforesaid amount. I also note that none of the said Noticees have disputed the value of the alleged unlawful gain made or loss avoided by them alongwith calculation of interest that has been shown in the interim order.
In view of the violation of the provisions of the PIT Regulations, 2015 and SEBI Act, 1992 by the Noticees, as noted above, I find that the Noticees are liable for issuance of appropriate directions for debarment from accessing the securities market and dealing in securities. Further, I find that directions under Section 11B(1) of the SEBI Act, 1992 be issued against Noticee no. 1, 2 and 3 to disgorge an amount of ₹ 6,17,60,184.13/-, jointly and severally, and against Noticee 3 and 4 to disgorge an amount of ₹ 2,13,23,161.64/-, jointly and severally.
The unlawful gains made and unlawful loss avoided by Noticee no.1 and 4, for their impugned trades during UPSI Period-II appropriate directions of disgorgement of unlawful gains made/loss avoided along with penal interest are being issued. I note that material available on record does not bring out any loss caused to any specific investor or a group of investors, as a result of violations committed by Noticee no. 1 to 5 with respect to UPSI-I and UPSI-II. I note that there is no material available on record to indicate that the violations committed by Noticee no. 1 to 5 are repetitive in nature.
In exercise of the powers conferred upon me under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992 and SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995, hereby direct as under:
(i) Noticee no. 1, 2, 3, 4 and 5 are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities (including units of mutual funds), directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of one (1) year, from the date of this order;
(ii) Noticee no. 1, 2, 3, 4 and 5 are restrained from buying, selling or dealing in the securities of PC Jeweller Ltd., directly or indirectly, in any manner whatsoever, for a period of two (2) years, from the date of this order;
(iii) The Noticee no. 1, 2 and 3 are directed to disgorge, jointly and severally, a sum of ₹ 6,17,60,184.13/- which was impounded by Impounding Order passed in the present matter and the same shall be credited into the Investor Protection and Education Fund (IPEF) referred to in Section 11(5) of the SEBI Act, 1992;
(iv) The Noticee no. 3 and 4 are directed to disgorge, jointly and severally, a sum of ₹ 2,13,23,161.64/- which was impounded by the Impounding Order passed in the present matter and the same shall be credited to the Investor Protection and Education Fund (IPEF) referred to in Section 11(5) of the SEBI Act, 1992;
(v) Noticee no.1, 2, 3, 4 and 5 are hereby imposed with penalty of Rs. Twenty (20) Lakhs each, under Section 15G of the SEBI Act, 1992, and are directed to pay their respective penalties within a period of forty-five (45) days, from the date of receipt of this order;
The restraints/ prohibition imposed in paras 43(i) and (ii), on the respective Noticees, shall run, concurrently. The obligation of the Noticees restrained/ prohibited by this Order, in respect of settlement of securities, if any, purchased or sold in the cash segment of the recognized stock exchange(s), as existing on the date of this Order, are allowed to be discharged irrespective of the restraint/ prohibition imposed by this Order. Further, all open positions, if any, of the Noticees, restrained/ prohibited in the present Order, in the F & O segment of the recognised stock exchange(s), are permitted to be squared off, irrespective of the restraint/ prohibition imposed by this Order.
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2021 (5) TMI 1019 - MADHYA PRADESH HIGH COURT
Limitation for filing the appeal before the Commissioner - HELD THAT:- Respondent/CBDT has informed that subsequently the CBDT has issued a circular No.10/21 dated 25.5.2021 following the order of Hon'ble the Supreme Court [2021 (5) TMI 564 - SC ORDER] and extending the limitation for filing the appeal before the Commissioner until further order.
Learned counsel for the petitioner does not dispute that above subsequent circular of the CBDT redresses the grievance of the petitioner.
Hence, the writ petition is disposed of by taking note of the subsequently development.
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2021 (5) TMI 1018 - DELHI HIGH COURT
Validity of faceless assessment u/s 144B - Denial of natural justice - As per assessee the impugned assessment order is passed in violation of the principles of natural justice as petitioner/assessee was not issued a show-cause notice-cum-draft assessment order - HELD THAT:- Issue notice. Mr. Abhishek Maratha, learned senior standing counsel, who appears on behalf of the respondent/revenue, accepts service.
A counter-affidavit will be filed within six weeks from today. Rejoinder thereto, if any, will be filed before the next date of hearing.
List the matter on 30.07.2021. In the meanwhile, there shall be a stay on the operation of the impugned assessment order.
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2021 (5) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of appeal - material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period - Section 61(3)(ii) of IBC - HELD THAT:- Learned Counsel for the Appellants has failed to point out that there is any material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period. The Promoters are failed to comply their one-time settlement proposal till 31st December, 2019.
Appeal dismissed.
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2021 (5) TMI 1016 - SC ORDER
Seeking grant of bail - HELD THAT:- Issue notice returnable on 30-7-2021. Dasti, in addition. Liberty to serve the Learned Standing Counsel for the respondent.
Let the petitioner be produced before the concerned Court within three days from today and the petitioner shall be released on interim bail on such terms and conditions as said Court may deem appropriate to impose.
List on 30-7-2021.
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2021 (5) TMI 1015 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Seeking withdrawal of the Corporate Insolvency Resolution Process - section 12A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- I&B Code and CIRP Regulations provide for various activities to be completed in a time bound manner and model time lines is provided as stated above inspite of the same, the CoC had time and again directed the RP to postpone the issue of EOI and FORM G, other activities of CIRP as stated earlier. By exercising their Commercial Wisdom, they cannot be permitted to not comply with the Provisions of the I&B Code as well as Regulations framed thereunder. Neither RP, CoC has filed any IA for seeking permission of this AA in this regard thereby CoC in this case has taken Law in to its hands and not complied with applicable provisions of I&B Code and CIRP Regulations.
Further after receipt of NCLT approval for the present withdrawal application, within 60 days they would receive their outstanding amount, constituting Monitoring Committee etc is not in line the I&B Code and CIRP Regulations further there is no backup plan is provided in case of failure to meet the shortfall within the time line agreed by the parties etc, and the settlement proposal contains lot of uncertainty, future events therefore the AA is of the confirmed view that the present application filed under Section 12 A of I&B Code read with Regulation 30 A of IBBI (CIRP) Regulations, 2016 deserves no favourable consideration therefore this application is dismissed.
Application dismissed.
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2021 (5) TMI 1014 - BOMBAY HIGH COURT
Seeking grant of Bail - bail sought on medical grounds - HELD THAT:- The Court observed that, there is surge in case of covid-19 and situation is looking grim. Even if respondent No.1 is sent to hospital for test, or otherwise it would be harmful to life due to covid-19. Special Care and medication is required.
The report dated 12th April, 2021 submitted to this Court mention that endocrinology department is not in J. J. Hospital. Due to circumstances as reproduced, the said test is not yet conducted. The applicant is now suffering from covid-19. The above report of J. J. Hospital (General Medicine) mentions that patient is presented with anxiety episodes, abdominal pain, loose stools and rectal bleeding - In the light of factual analysis, the applicant can be granted temporary bail to undergo tests and instant treatment if required. The Special Court, however granted permanent bail on medical grounds. On the basis of material on record, no case for granting permanent bail was made out.
The order granting bail to the respondent No. 1 has been kept in abeyance - temporary bail for a period of two months can be granted to respondent No.1 - bail application allowed in part.
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2021 (5) TMI 1013 - ITAT INDORE
Bogus STCG/LTCG - Treating the capital income as income from other sources - income of the assessee remained the same as was disclosed in the return of income, except the change of head of taxing the “capital gain” income as “Income from other sources” - HELD THAT:- As examining the documents placed before us are satisfied that the assessee had made genuine claim of capital gain (Long Term Capital Gain/Short Term Capital Gain) in their respective returns of income and both the purchase and sales of shares are proved to be correct and the credit of the consideration in the bank account for the years under appeal are having direct nexus with the sale of equity shares made during the year, are of the considered view that both lower authorities were not justified in treating the alleged income as income from other sources without disputing the genuineness of the evidences placed on record finding anything contrary to the claim of the assessee, and merely denying the claim of the assessee by giving general remarks. Thus, this common issue is decided in favour of the assessee(s) and the finding of the CIT(A) of confirming the action of the Ld. AO of treating STCG/LTCG as income from other sources is set aside.
Capital gain from sale of equity shares as income from other sources - HELD THAT:- During course of search, copies of DEMAT accounts were seized by the search team which were having same details as were filed by the assessee in their respective income tax returns before the search took place. No other incriminating material has been referred by the Ld. AO which has been found during the course of search indicating that the assessee(s) have entered into sham transaction and the alleged transaction of purchase and sale of shares are in the nature of accommodation entries or there is any direct nexus of the assessee to have involved in managing/ arranging the accommodation entries. The facts remains undisputed that the alleged additions are neither based on an incriminating material found during the course of search nor any material gathered during the assessment proceedings and the finding of both the lower authorities are just based on the theory developed by the revenue authorities, on the basis of the result of some investigation carried out by teams of revenue department in some other cases and the reports of such so called theory have not been controverted to the assessee, thus, denying them the principles of natural justice of cross examination the information of the 3rd party on the basis of which additions were going to be made.
We, therefore, are of the considered view the second common issue also deserves to be decided in favour of the assessee as we find that the Ld. AO had no material evidence on record to treat the income shown as LTCG/STCG from sale of equity shares as income from other sources.
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2021 (5) TMI 1012 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
Liquidation of Corporate Debtor - Section 33 of the IB Code - HELD THAT:- No one appeared on behalf of the Suspended management even after issuance of notice. The Suspended Management is also found absent in the said meeting held on 08.03.2021.
In view of the above situation, it is also pertinent to mention herein that recently the Hon'ble Supreme Court of India in its judgement passed in Civil Appeal No. 8766-67 of 2019 Committee of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] has held that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor, but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC.
The Corporate Debtor is allowed to be liquidated - application allowed.
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2021 (5) TMI 1011 - ITAT HYDERABAD
TP Adjustment - ALP adjustments pertaining to interest on receivables qua its international transactions with the overseas Associated Enterprise (AE) - CIT-DR’s vehement contention is that the TPO as well as the DRP have rightly taken the foregoing SBI rate’s benchmark involving the short term deposits - HELD THAT:- We find no merit in the instant argument as such a short term deposit cannot be taken at par with an international transaction u/s.92B of the Act since the latter involves foreign currency and overseas market conditions. In addition to this, learned lower authorities have also not adopted any uncontrolled party/comparable in the very segment as well so as to come to the conclusion that the assessee’s receivables in case of overseas AEs involved more than the market practice of reasonable time period. We keep in mind all these clinching aspects and direct the TPO to delete the impugned ALP adjustment in issue. The assessee’s former substantive ground stands accepted in the above terms.
Such interest on receivables ought not to have been treated as an international transaction covered under Explanation(c) to Section 92B of the Act, inserted in the Act vide Finance Act, 2012 w.e.f.01-04- 2001 is rejected as per the hon'ble Madras high court’s decision in Redington India Pvt. Ltd., Vs. DCIT, in Tax Appeal No.590 and 591 of 2019 dt.10-12-2020 holding that a corporate guarantee indeed forms an international transaction and covered by the explanation to section 92B with retrospective effect.
There is hardly any issue that the departmental authorities have applied the foregoing Explanation with retrospective effect qua issue of a corporate guarantee which also included the impugned interest on receivables. The assessee’s legal argument is declined therefore.
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2021 (5) TMI 1010 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - main defence of Corporate Debtor is that the Petition is barred by limitation as date of guarantee invocation was 08.12.2014 and the period of limitation expired on 08.12.2017 - extension of limitation period or not - Section 18 of Limitation Act - HELD THAT:- The Corporate Debtor has executed corporate guarantee dated 14.01.2014, 25.02.2010, 26.06.2009 wherein the Corporate debtor have agreed to undertake to pay on demand an amount of ₹ 56.70 Crores in case the borrower commits default under the facility agreement. The Principal borrower failed to repay the said amount as on 01.06.2019 amounting to ₹ 60,39,87,991.41/-. Hence, the Petitioner Company had invoked and had issued recall notice to the Principal borrower on November 14, 2014 and also invoke the proceedings under SARFAESI and invoke the guarantees on December 08, 2014 - Essentially all the financial debt u/s. 7 of IBC is complied with further, the claim of the financial creditor is recognised under the guarantee deed and therefore amounts to a debt and there has been default of non-payment of dues by the Principal borrower and thus the Petitioner has rightly invoked the guarantee deed.
In J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. & Anr. [2008 (1) TMI 963 - SUPREME COURT] wherein the Hon‘ble Supreme Court held that Section 18 of Limitation Act, 1963 deals with acknowledgment of writing. Sub-section 1 provides that where before the expiration of period for a suit for application in respect of any rights, an acknowledgment of liability in respect of such right has been made in writing signed by party against whom that it is claimed, a fresh period of limitation shall be computed from the time when acknowledgment was so signed. The explanation to this section was to provide that an acknowledgment may be insufficient though it omits to specify the exact nature of right or averse that the time for payment has not yet come, or is accompanied by refusal to pay or is coupled with claim to set off, or is addressed to a person other than a person entitled to a right.
It is a well settled law that a writing of acknowledgment of liability must involve an admission/ conscious affirmation and intention of the Corporate Debtor vide letter dated 27.09.2017 at para 2 had mentioned that the principal borrower Great Indian Nautanki Company Private Limited had failed to pay its dues to IDBI as a result of which IDBI has invoked the above-mentioned guarantee and called upon Wizcraft International Entertainment Private Limited to pay IDBI dues of ₹ 49.39 crores - the Corporate Debtor has sought time which amounts to admission and acknowledgment of liability and also recorded the default of non-payment of money by the Principal Borrower, thus the letter dated 27.09.2017 amounts of acknowledgment of liability in writing and period of limitation is extended from 27.09.2017 to 26.09.2020 under Article 137 of Limitation Act.
The judgment in Jignesh shah vs. Union of India [2019 (9) TMI 1121 - SUPREME COURT] correctly hold that the suit for recovery based upon cause of action it is within limitation cannot be in any manner in fact separate an independent remedy of winding up proceedings. In law, when time begins to run, it can only be extended in the manner provided the limitation act. For eg. An acknowledgment of liability u/s. 18 of Limitation Act, 1963 would extend limitation period but a suit for recovery which is independent proceedings distinct from the remedy of windings up, in no manner, in fact the limitation within which winding up proceedings is to be filed, by somehow keeping the debt alive for the purpose of winding up - the Hon‘ble Supreme Court has held that limitation can only be extended in the manner provided u/s. 18 of Limitation Act, 1963.
This Bench is of the considered opinion that the letter of the Corporate Debtor dated 27.09.2017 has amounts to acknowledgment of liability and thus extends the limitation periods u/s. 18 of Limitation Act, 1963 and thus all the ingredients of Section 7 of IBC are satisfied and the liability of Corporate Debtor being a Corporate Guarantor is established in view of the admission of liability by the Corporate Debtor vide its Letter 27.09.2017 and the Petition is within 3 years is filed and hence the Petition is admitted - moratorium declared.
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2021 (5) TMI 1009 - DELHI HIGH COURT
Assessment completed in consonance with the draft assessment order - HELD THAT:- As according to us, once a request for accommodation was made, it was incumbent upon the assessing officer to deal with the same, and thereafter, take next steps in the matter, albeit, as per law. Therefore, the petitioner, to our minds, is correct, in submitting that no opportunity was given to respond to the show-cause notice cum draft assessment order dated 02.04.2021.
We are inclined to set aside the impugned assessment order dated 12.04.2021. It is ordered accordingly. Liberty is, however, given to the assessing officer to pass a fresh assessment order, after giving an opportunity to the petitioner, to respond to the show-cause notice cum draft assessment order dated 02.04.2021.
To hasten the proceedings, it has been suggested by Mr. Agarwal that the petitioner can proceed to file a response immediately, and submit the same with the assessing officer. It is directed accordingly. The petitioner will file its response within two weeks of receipt of a copy of this order. The concerned assessing officer will grant a personal hearing to the authorized representative of the petitioner, albeit, via the videoconferencing mechanism
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2021 (5) TMI 1008 - ITAT HYDERABAD
Disallowing 80IA deduction - non meeting the conditions of development of infrastructure facility - Whether lower authorities' have erred in law and on facts in disallowing assessee's 80IA(4) deduction claim despite the fact that it has developed the impugned infrastructure facilities? - assessee pleaded that it has undertaken the business risk not only in the development of the said lift channel forming part of the irrigation project which has turned barren uneven tracks of land to a canal but also it had deployed all of the corresponding plant and machinery, labour force followed by retention money's project thereby satisfying all the conditions of development of infrastructure facility - HELD THAT:- The assessee's first and foremost plea that we ought to adopt liberal interpretation while considering section 80IA(4) claim in the light of relevant facts in the instant case deserves to reject. Suffice to say, such a course of liberal interpretation is no more available while dealing with the Income Tax Act's provisions as per honourable apex court's recent constitutional bench's decision in Commissioner of Customs (Import) Vs. Dilip Kumar and Co. [2018 (7) TMI 1826 - SUPREME COURT] settling the law that a fiscal statute as well as an exemption clause incorporated therein ought to be construed in stricter parlance only. Their lordships make it clear that benefit of doubt in case of taxing provision goes to the tax payer and vice versa in an instance of an exemption provision. The assessee's first argument is rejected therefore.
We find force in Revenue's instant argument as the Finance Act, 2009 substitutes the earlier explanation that the same would not cover a works contract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc.
Stages I & II of the Bhima Lift Irrigation project undertaken by the assessee containing " all the civil works like canal approach to the tunnel, tunnel, surge pool pump house, delivery mains manufacturing, testing, inspection, packing, supply, erection and commissioning of electro mechanical and hydro mechanical equipment" indeed formed an architectural as well as engineering structure and therefore, amounts to an execution of a "works contract awarded by the state government" through its irrigation development only and covered u/s. 80IA Explanation incorporated in the Act by the Finance Act, 2009 w.e.f. 1.4.2000.
CIT-DR at this stage invited our attention to page 18 in assessee's Paper Book II Part 1 that it had purely executed "works contract" only in view of the fact that the irrigation department had issued it mobilization advances on multiple occasions from time to time. He next took us to agreement clause 3.15 containing "contract price and payment" making it evident that the assessee had to be paid on "fixed lump sum monthly basis" only. And further that the assessee was entitled to get "fixed lump sum monthly instalment payments provided value of the work executed is more than or equal to the fixed lump sum monthly instalment as indicated in the agreement." The said agreement stipulated advance payments to the assessee qua supply of goods at the site. All these facts sufficiently indicate that the assessee, assuming that not accepting that it is the developer u/s. 80IA(4) of the Act, executed a works contract only under Explanation to section 80IA of the Act and therefore, not entitled for the impugned deduction.
Such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsibilities of the lift irrigation project by paying reduction money and performance guarantee(s) as well - We hold that this last argument also fails to cut any ice since the assessee has merely performed a works contract and its retention money or the so called performance guarantee only gave an assurance to the irrigation development that it had carried out the corresponding construction etc. as per the specified design norms than involving any business risk. We accordingly hold the view of our independent appreciation of facts as well as assessment findings that the assessee is a contractor having executed works contract only.
It is clear that the assessee has first of all been paid mobilization advances by the state government's department on periodic basis, and, then only it executed the corresponding lift irrigation project works contract followed by its yet another claim of section 80IA of the Act deduction (supra). We are afraid that such a liberal interpretation would amount to going against the stricter interpretation principle in view of honourable apex court decision Raghunath Rai Baraza Vs. PNB [2006 (12) TMI 479 - SUPREME COURT]. We accordingly conclude both the learned lower authorities have rightly disallowed assessee's 80IA deduction claim involving varying sum(s) (supra) in their respective orders. - Decided against assessee.
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2021 (5) TMI 1007 - ITAT HYDERABAD
Addition towards ESI and PF - addition relating to employees contribution to PF & ESI on the ground that the same was deducted but was not remitted into relevant fund within the due dates prescribed under the relevant acts though the same was paid before the due date for filing return of income - HELD THAT:- As decided in VALUE MOMENTUM SOFTWARE SERVICES PRIVATE LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17 (2) , HYDERABAD [2021 (5) TMI 989 - ITAT HYDERABAD] we find no merit in the Revenue’s foregoing stand. We take note of the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(va) as well as Section 43B by inserting corresponding Explanations that although the impugned employees provident fund comes under the former provision only, the same is applicable from 01-04-2021 onwards. Meaning thereby that the legislature itself has condoned the impugned default before 01-04-2021. We thus delete the impugned employees provident fund disallowance for this precise reason alone. Necessary computation to follow as per law - we direct the AO to delete the addition made towards PF & ESI in both the years under consideration. Accordingly, the ground raised on this issue in both the years is allowed.
Addition u/s 14A - HELD THAT:- It is settled position of law that the provisions of section 14A can be applied to quantify the expenses in relation to exempt income. Since the exempt income is Nil, section 14A will not apply - in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] has held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year.
We find that the investments were made and no exempt income was earned from the investment so made, the provisions of Section 14A will not applicable to the case of assessee. Therefore, following the said decision in the case of Cheminvest Ltd., (supra),we direct the AO to delete the addition made on this count.
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2021 (5) TMI 1006 - SUPREME COURT
Jurisdiction - reversal of acquittal passed by High Court - whether in the facts and circumstances of the case, the High Court is justified in interfering with the order of acquittal passed by the learned trial Court? - HELD THAT:- The prosecution witnesses have fully supported the case of the prosecution, more particularly PW2 & PW4 and they are found to be trustworthy and reliable, non-examination of the independent witnesses is not fatal to the case of the prosecution. Nothing is on record that those two persons, namely, Shiv Shankar and Bhagwati Prasad as mentioned in the FIR reached the spot were mentioned as witnesses in the chargesheet. In any case, PW2 & PW4 have fully supported the case of the prosecution and therefore non-examination of the aforesaid two persons shall not be fatal to the case of the prosecution.
A suggestion was put to him in the cross-examination that at the time of arrest the Accused Murlidhar Pathak did not receive any injury, however, the same has been specifically denied that it is not true that he did not receive injury at the time of his arrest. Similar suggestions were made to other witnesses and the same were denied. Therefore, as such, it cannot be said that the prosecution has failed to explain the injury on the said Accused. Even the aforesaid aspect has been considered in detail by the High Court and the said statement has been appreciated by the High Court on re-appreciating the entire evidence on record, more particularly the medical evidence and even the deposition of the doctors examined by the prosecution as well as by the defence.
When the High Court has come to the conclusion that the findings recorded by the learned trial Court while acquitting the Accused were perverse and even contrary to the evidence on record and/or misreading of the evidence, the High Court has rightly interfered with the judgment and order of acquittal passed by the learned trial Court and has rightly convicted the Accused. In the present case, the Appellant-original Accused No. 4 was specifically named right from the very beginning in the FIR. He has been attributed the specific role. The same has been established and proved from the evidence of PW4 (even if the deposition of PW2 is for the time being ignored).
No error has been committed by the High Court in interfering with the judgment and order of acquittal passed by the learned trial Court - there are no reason to interfere with the impugned judgment and order passed by the High Court reversing the acquittal and convicting the Accused.
Appeal dismissed.
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2021 (5) TMI 1005 - ITAT MUMBAI
Assessment u/s 153C - during the course of search, unaccounted cash/jewellery and incriminating documents indicating suppression of sales etc. were found and seized as per panchnamas prepared - Whether Transactions recorded in the seized documents have not been explained by the assessee at the time of assessment proceedings? - HELD THAT:- In the instant case, on perusal of the impugned order indicates that excess amount was found at 112-122, Hira Bhavan, Rajaram Mohan Roy Road, Prarthana Samaj, Mumbai, but the assessee explained that the said amount was actually seized from the residential premises of late Shri Jitendra Mehta, director and he had duly admitted said amount in his individual capacity. He observed that except this, there is nothing on record for the impugned year to say that any money, bullion, jewellery or other valuable article or thing or books of account belonging to the assessee was seized or requisitioned as a result of search. Further he observed that with regard to the seized paper Annexure A-l on perusal of the same shows that there is no mention of the assessee company or the project undertaken by the assessee. During the year under consideration, as observed by the AO in the impugned assessment order, the assessee company has executed the project name 'Moksh Plaza' and this name did not find mention on page 114 of Annexure A-l. Thus, it is very clear from the above facts that seized paper found during the course of search cannot be considered belonging to the assessee.
AO has not brought on record any material to link the document found during search to the projects handled by the assessee during the assessment year, for that matter in any assessment year. Therefore, the ground numbers raised by the revenue are dismissed.
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2021 (5) TMI 1004 - KARNATAKA HIGH COURT
Disallowance u/s 14A r.w.r. 8D - Whether Tribunal is right in remanding back the issue to assessing authority with a direction to allow the relief as the assessee do not have exempt income and as such no disallowance can be made under Section 14A read with Rule 8D contrary to provisions of Section 14A and Rule 8D and Circular No.5/2014 dated 11.2.2014 ? - HELD THAT:- The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. The High Court of Madras in M/S. CHETTINAD LOGISTICS PVT. LTD. [2017 (4) TMI 298 - MADRAS HIGH COURT] has relied on the decision of in COMMISSIONER OF INCOME TAX VS. WALFORT SHARE AND STOCK BROKERS [2020 (10) TMI 518 - KARNATAKA HIGH COURT] wherein it has been held that Section 14A is relatable to income of actual income or not notional or anticipated income. Therefore, the conclusion arrived at by us in M/S NOVEL SOFTWARE INDIA (P) LTD.[2021 (2) TMI 145 - KARNATAKA HIGH COURT] is affirmed but for different reasons.
As also clarified by us that while recording the conclusion in KINGFISHER FINVEST LTD. [2020 (10) TMI 518 - KARNATAKA HIGH COURT] that disallowance under Section 14A has to be made even taxpayer has not earned any exempt income, this court has misread the ratio of the decision of the Supreme Court in MAXOPP INVESTMENT LTD [2018 (3) TMI 805 - SUPREME COURT] and therefore, the aforesaid view being contrary to the law laid down by the Supreme Court is not a binding precedent. - Decided in favour of assessee.
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2021 (5) TMI 1003 - SUPREME COURT
Seeking grant of anticipatory bail - Appellant's daughter died under suspicious circumstances in her matrimonial home - complaint registered under Sections 304B and 498A, Indian Penal Code read with Sections 3 and 4 of the Dowry Prohibition Act against the Respondents Nos. 2 to 5 - Appellant's brother and the latter's two sons were attacked by the Respondents, due to a dispute between the parties relating to encroachment of land - whether the High Court, while dismissing the anticipatory bail applications of the Respondents, could have granted them protection from arrest?
HELD THAT:- The considerations on the basis of which the Court is to exercise its discretion to grant relief Under Section 438, Code of Criminal Procedure have been decided by this Court in a catena of judgments and needs no restatement - A Court, be it a Sessions Court or a High Court, in certain special facts and circumstances may decide to grant anticipatory bail for a limited period of time. The Court must indicate its reasons for doing so, which would be assailable before a superior Court. To do so without giving reasons, would be contrary to the pronouncement of this Court in SUSHILA AGGARWAL AND OTHERS VERSUS STATE (NCT OF DELHI) AND ANOTHER [2020 (1) TMI 1193 - SUPREME COURT]. If the High Court had therefore decided to allow the anticipatory bail application of the Respondents-Accused herein, albeit for a limited period of 90 days, the task before this Court would have been somewhat easier.
It is no longer res integra that any interpretation of the provisions of Section 438, Code of Criminal Procedure has to take into consideration the fact that the grant or rejection of an application Under Section 438, Code of Criminal Procedure has a direct bearing on the fundamental right to life and liberty of an individual. The genesis of this jurisdiction lies in Article 21 of the Constitution, as an effective medium to protect the life and liberty of an individual. The provision therefore needs to be read liberally, and considering its beneficial nature, the Courts must not read in limitations or restrictions that the legislature have not explicitly provided for. Any ambiguity in the language must be resolved in favour of the applicant seeking relief - If the proviso to Section 438(1), Code of Criminal Procedure does not act as a bar to the grant of additional protection to the applicant, the question still remains as to under what provision of law the Court may issue relief to an applicant after dismissing their anticipatory bail application.
The Court must take into account the statutory scheme Under Section 438, Code of Criminal Procedure, particularly, the proviso to Section 438(1), Code of Criminal Procedure, and balance the concerns of the investigating agency, complainant and the society at large with the concerns/interest of the applicant. Therefore, such an order must necessarily be narrowly tailored to protect the interests of the applicant while taking into consideration the concerns of the investigating authority. Such an order must be a reasoned one - the impugned orders passed by the High Court, in the present appeals, do not meet any of the standards as laid out above. It is for the following reasons: firstly, after the dismissal of the anticipatory bail application, on the basis of the nature and gravity of the offence, the High Court has granted the impugned relief to the Respondents without assigning any reasons. Secondly, in granting the relief for a period of 90 days, the Court has seemingly not considered the concerns of the investigating agency, complainant or the proviso Under Section 438(1), Code of Criminal Procedure, which necessitates that the Court pass such an exceptional discretionary protection order for the shortest duration that is reasonably required. A period of 90 days, or three months, cannot in any way be considered to be a reasonable one in the present facts and circumstances.
The resultant effect of the High Court's orders is that neither are the Respondents found entitled to pre-arrest bail, nor can they be arrested for a long duration - appeal allowed.
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2021 (5) TMI 1002 - ITAT MUMBAI
Exemption u/s 11 denied - addition applying principle of mutuality - AO denied exemption primarily on the reasoning that the assessee exists only for its members and its activities are directed only to the members; hence, it is a mutual concern - revenue bringing to tax the income earned by the assessee from interest and donation from non-members by applying the principles of mutuality - HELD THAT:- In the facts of the present case, it is very much clear that the assessee has carried out activities in furtherance of its objects. In the process, the assessee might have earned some income by way of subscriptions, sale of publications, etc. However, this income earning activities of the assessee cannot be treated to be in the nature of trade, commerce or business. In any case of the matter, from its very inception the assessee has been granted exemption under section 11 of the Act. Only, in the impugned assessment years its claim of exemption has been denied. Though, it may be a fact that while granting exemption in earlier as well as subsequent assessment years no scrutiny assessment has been made; however, fact remains that assessee's claim of exemption has been accepted over the years - the activities/objects on the basis of which claim of exemption under section 11 of the Act was accepted in other assessment years have not changed in the impugned assessment years. In fact, the registration granted under section 12A of the Act still continues. That being the case, even applying the rule of consistency, assessee's claim of exemption under section 11 of the Act has to be allowed. The decisions relied upon by the learned counsel for the assessee clearly supports this view.
Assessee having maintained its status as charitable organization is entitled for exemption under section 11 of the Act, subject to fulfillment of conditions prescribed under sections 11, 12 and 13 of the Act. However, in the facts of the present appeals there is no allegation by the departmental authorities that the assessee has violated any of the conditions of the aforesaid provisions, except, the allegation that the assessee is a mutual concern. That being the case, all its income including the interest and donations received from non-members would also be exempt from taxation.
Addition to the income on the allegation that the surplus funds accumulated in assessment year 2005-06 has not been utilised before 2010-11 - contention of assessee that the assessee has already offered the amount of ₹ 1 lakh as income in the return of income filed for the assessment year 2010-11, therefore, no further addition should have been made - HELD THAT:- Having considered rival submissions, I direct the assessing officer to verify assessee's claim and in case it is found that the assessee has already offered the amount of ₹ 1 lakh as income in assessment year 2010-11, addition should be deleted. This ground is allowed for statistical purpose.
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