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2022 (9) TMI 1595 - GAUHATI HIGH COURT
Maintainability of petition - availability of alternative remedy - pre-condition of having reasons to belief - Seizure of areca nuts u/s 110 of the Customs Act, 1962 - Jurisdiction to issue SCN 124 of the Act - goods (areca nuts) were illegally procured from Myanmar. or not.
Maintainability of petition - availability of alternative remedy - HELD THAT:- In the cases of Mohanlal Jitamalji Porwal & Anr. [1987 (3) TMI 111 - SUPREME COURT] as well as Indru Ramchand Bharvani & Ors. [1988 (7) TMI 78 - SUPREME COURT], the Hon’ble Supreme Court was in seisin of matters wherein the interpretation of the term “reasonable belief” had arisen, and it was held that 'There this Court observed whether or not the office concerned had seized the article under the “reasonable belief” that the goods were smuggled goods, is not a question on which the Court can sit on appeal. The circumstances under which the officer concerned entertains reasonable belief, have to be judged from his experienced eye who is well equipped to interpret the suspicious circumstances and to form a reasonable belief.'
Pre-condition of having reasons to belief - HELD THAT:- The competence of the Officer in question has not been questioned and the principal issue is that before the search and the impugned decision is taken, the concerned Officer did not have materials to construe "reasons to believe" regarding commission of an offence. Such defence is apparently fallacious inasmuch, as this Court is of the prima facie view that materials were there before the competent authority which were considered before coming to the conclusion of reasons to believe. Such satisfaction is obviously a subjective one and cannot be interfered with in a routine manner. In a given case, however, if such powers were mechanically exercised without taking into consideration the relevant facts and circumstances, the action would be without jurisdiction which is, however, not there in the instant case. This Court has seen that not only there were materials before the authority, such materials are also found to be relevant and cogent. It is a settled law that in exercise of powers under Article 226 of the Constitution of India, especially the Certiorari jurisdiction, this Court is only required to see the fact as to whether the authority, in question, has taken into consideration the relevant materials and has cited reason for the same and once a prima facie view is taken on the availability of those preconditions, this Court may not go into the sufficiency of the reasons.
Jurisdiction to issue SCN 124 of the Act - HELD THAT:- An the subject of interference at the stage of issuance of show cause notice, this Court is of the view that in most of the cases, such interference has been deprecated whereby enquiries have been stalled and investigation retarded which was initiated to find the actual facts. Therefore, only when the Court is of a firm view that there is no bona fide in the act of issuing show cause notice or the same is bad for want of jurisdiction, writ petition should not be entertained in a routine manner.
This Court is of the view that present is not a fit case for invoking the extra-ordinary powers under Article 226 of the Constitution of India. Accordingly, the writ petition stands dismissed.
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2022 (9) TMI 1594 - ITAT MUMBAI
TP Adjustment - Selection of MAM - CPM or TNMM - TPO rejected the CPM as the most appropriate method and proposes to use the Transactional Net Margin Method [TNMM] at entity level using a set of external comparables belonging to Pharmaceutical segments - HELD THAT:- When the complete set of books of accounts along with necessary supporting were produced , merely saying that certain bill and vouchers with respect to cost is not provide , is merely an attempt to reject the study of assessee. Had that been the case, the ld TPO should have provided the instances and then justified rejection of working given by assessee. There is no requirement of maintaining segmental accounts with respect to AE and Non AEs, maintaining separate quantitative details with respect to quantity dealt with AE and Non AE, or maintaining separate books of accounts under any law applicable to assessee. If a particular requirement is not mandated by law, no fault can be found on the part of assessee and then rejected a method accepted by both the parties over a time.
TNMM adopted by TPO also saddled with several flaws for which there is no answer. Assessee claims that if the margins are corrected, margins of assessee is better than comparables is los not looked in to by ld TPO as well as Ld DRP. TPO did not provide basic working of all those 65 comparables and how these comparables are selected and what are the filters applied is also not shown.
Therefore, there is no justification for adopting transactional net margin method where in earlier year as well as in subsequent year the cost plus method adopted by the assessee has been accepted. We therefore direct the ld AO/ ld TPO to delete the adjustment made in adopting entity level TNMM but accept CPM as MAM - principal ground of adopting CPM in determining arm’s length price has been adjudicated in favour of the Assessee.
Guarantee commission on account of corporate guarantees provided by the assessee to its associated enterprises - international transaction or not? - Assessee contended that providing corporate guarantee the associated enterprise cannot be an international transaction and further the same has been provided for the furtherance of the business of the assessee and therefore the non charging of any guarantee commission is a business decision - HELD THAT:- We find that scope of Section 92B has further been expanded by addition of explanation by the finance act 2012 with retrospective effect from 1/4/2002 which specifically provides that international transaction includes the guarantee. Therefore, it cannot be said that corporate guarantee issued to associated enterprise is not an international transaction. Therefore, we are inclined to agree with the submission of the Ld. DR that providing corporate guarantees to overseas AE’s is an international transaction.
Arm’s-length price of the corporate guarantee commission to associated enterprises - Considering the various decisions in this regard, we direct the AO to limit the adjustment to 0.5% p.a. on the amount of corporate guarantee provided based on the period for which the guarantee was operative in respect of each of the AE’s during the year under consideration. The learned transfer-pricing officer is directed to compute the arm’s-length price of the corporate guarantee at the rate of 0.5%. Accordingly ground number 4 of the appeal is allowed with above directions.
Imputation of share application money paid to Associated Enterprises (AE’s) - DR could not show us any reason to deviate from the aforesaid orders and no change in facts and law were alleged in the assessment year under consideration. Thus, respectfully following the Orders passed by the Coordinate Bench in assessee’s own case supra, we direct the AO / TPO to delete the adjustment made towards notional interest on Shares and share application money for delayed allotment of shares. Accordingly, ground no. 5 raised in assessee’s appeal is allowed.
Disallowance of the deduction u/s 10B of the Act on export profit earned by its unit - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee’s own case in Strides Pharma Science Ltd. [2018 (6) TMI 512 - ITAT MUMBAI] allowed the deduction claimed by the assessee under Section 10B - we direct the AO to allow the deduction claimed under section 10B of the Act. Accordingly, ground raised in assessee’s appeal is allowed.
Disallowance of weighted deduction u/s. 35(2AB) - assessee during the assessment year has incurred certain R&D expenses and claimed the weighted deduction @150% u/s 35(2AB) - same was disallowed by the AO and the DRP stating that the no Form 3CL and 3CM was furnished and only a copy of registration certificate from the competent authority recognising the assessee’s R&D facility has been furnished - HELD THAT:- As stated that the delay in issuing Form No. 3CM and report in Form No. 3CL by the DSIR was due to their administrative reasons. AR also submitted that these forms were submitted with the AO and the DRP after the DRP order but before passing the final assessment order dated 30.10.2012. The learned AR also submitted that this Tribunal in assessee's own case in AY 2002-03 [2016 (1) TMI 752 - ITAT MUMBAI] and in AY 2003-04 & 2004-05 [2016 (4) TMI 1316 - ITAT MUMBAI] and [2018 (6) TMI 512 - ITAT MUMBAI] for the assessment year 2007-08 allowed the deduction claimed by the assessee under Section 35(2AB) of the Act.
Disallowance of the rental expenditure u/s. 40A(2)(b) - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee’s own case in Strides Pharma Science Ltd. [2018 (6) TMI 512 - ITAT MUMBAI] held that rent paid is not falling within the mischief of section 40A(2)(b) of the Act and seems reasonable. We allow the claim of the assessee and this issue of assessee's appeal is allowed.
Disallowance of FCCB premium and expenses - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee’s own case in Strides Pharma Science Ltd. [2018 (6) TMI 512 - ITAT MUMBAI] for the assessment year 2007–08, vide order dated 08.06.2018, had deleted the said disallowances. D.R. could not show us any reason to deviate from the aforesaid order and no change in facts and law were alleged in the relevant assessment year. Thus, respectfully following the order passed by the Co-ordinate Bench of the Tribunal in assessee’s own cases cited supra, we are of the view that the assessee has rightly claimed the liability as expense direct the Assessing Officer to delete the said disallowance u/s 37(1) of the Act.
Disallowance u/s 14A r/w rule 8D - expenditure attributable to earning of exempt income - suo–motu disallowance offered by the assessee - HELD THAT:- As in assessee’s own case in Strides Pharma Science Ltd.for the assessment year 2014–15 total investments and investments which yield exempt income is not readily available before us. We, therefore, are of the considered view that ends of justice would be met if the disallowance is made after re- computing average value of investment by considering only those investments which yield exempt income. Hence, the matter is restored to the AO to re-work the disallowance in line of our discussions given hereinabove.
Disallowance u/s 14A added back to the profits while computing the book profit u/s 115JB - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee’s own case in Strides Pharma Science Ltd for the assessment year 2014–15 and for the assessment year 2015-16 [2022 (4) TMI 543 - ITAT MUMBAI] has deleted the addition made to book profit computed under section 115JB.
Adjustments made to “book profits” computed in terms of section 115JB of the Act vis-à-vis provision for leave encashment and forex losses on forward contracts - HELD THAT:- Based on the facts and circumstances of this case, we are of the view that Provision for leave encashment is an ascertained liability and accordingly, direct the AO to delete the same for determining the book profits. Further, the amount of forex losses on forward contracts appears to be an oversight since it was rectified by the AO himself only in the normal computation and not from the MAT computation. Accordingly, we direct the AO to give the same treatment and delete the same from the MAT computation as well. Accordingly, ground no.13, raised in assessee’s appeal is allowed in the favour of the assessee.
Non-grant of tax credit on the distributed profits u/s 115O/115P and short grant of TDS Credit - As per the Ld AR, proper credit for DDT and TDS has not been granted by the AO. In view of the above, we direct the Assessing Officer to verify the tax credit and allow it as per the records. Accordingly, grounds raised in assessee’s appeal is allowed for statistical purpose.
Reworking of deduction under section 10B - HELD THAT:- We find that the Co–ordinate Bench of the Tribunal in assessee’s own case in Strides Pharma Science Ltd. [2018 (6) TMI 512 - ITAT MUMBAI] had allowed the claim of the assessee. The learned D.R. could not show us any reason to deviate from the aforesaid order and no change in facts and law were alleged in the relevant assessment year.
Thus we are of the view that the second proviso to Section 10B(1) of the Act was only for assessment year 2003-04 and not for other years. The AO is directed to verify the facts of the case and accordingly, allow the claim of the assessee. This issue of assessee's appeal is set aside to the file of the AO - Accordingly, this ground raised in assessee’s appeal is allowed.
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2022 (9) TMI 1593 - ITAT BANGALORE
TP adjustment - interest paid on Non-convertible Debentures (NCDs) issued by the assessee to its Associated Enterprise (AE) - TPO not considering the effective rate of interest taking into account the moratorium period - assessee benchmarked the said transactions using CUP method - TPO did not accept the effective rate considered by the assessee and made the TP adjustment by applying the coupon rate of 15% as interest on Tranche I & II of NCDs - DRP rejected the objections raised by the assessee on the ground that there is an option available to the assessee to pre-pay the interest and therefore the effective rate of interest cannot be compared for computing the ALP.
HELD THAT:- As in Goodyear South Asia Tyres P. Ltd.[2014 (12) TMI 349 - ITAT PUNE] clearly laid out the ratio that it would be appropriate to compute effective rate of interest in respect of international transaction of loan entered into with the associated enterprise before carrying out the exercise of benchmarking such international transactions vis-à-vis the arm's length price/interest of the comparable uncontrolled transactions.
In assessee’s case, though the coupon rate agreed is at 15% and 14.25%, there is a moratorium clause whereby assessee is having a moratorium period of 60 months for Tranche-I, 58 months & 11 days for Tranche-II and 24 months for Tranche-III. The assessee in the TP study has also given a detailed working for arriving at effective rate of interest (Annexure 3.1 to 3.3 of TP study) after considering the said moratorium period.
Lower authorities have not considered the said working and have rejected the same on the ground that assessee has debited the Profit & Loss account with interest accrued at 15% / 14.25% and also on the ground that there is a pre-payment of interest clause in the agreement. This, in our considered view, is not the correct approach since the time value of money needs to be considered and debit to the Profit & Loss account is not the relevant factor for determination of ALP.
Assessee has not paid any amount towards interest to the AE till date and as per the submissions of the ld AR, the assessee is in talks with the AE for extension of the moratorium period. This factual position has not been considered by the TPO/DRP.
Thus we remit the issue back to the TPO to analyse the transfer pricing study done by the assessee afresh. considering case of Goodyear South Asia Tyres P. Ltd. (supra) and the comparables chosen by the assessee. Assessee’s appeal is allowed for statistical purposes.
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2022 (9) TMI 1592 - SC ORDER
Seeking release of attached scheduled properties - the petitioners approached the High Court challenging the order of provisional attachment/ attachment as the Appellate Authority was not available - HELD THAT:- It is reported that now the Appellate Authority is available and therefore, the petitioners proposed to approach the Appellate Authority to challenge the order of attachment.
Release of attached properties - HELD THAT:- As the petitioner is ready and willing to deposit Rs. 3,00,00,000/- in fixed deposit in any nationalised Bank with the lien in faovur of the Enforcement Directorate and the copy of the fixed deposit would be deposited with the E.D., we direct that on producing the fixed deposit of Rs. 3,00,00,000/-, with no lien of any other party, except the Enforcement Directorate and by way of interim order, the attachment with respect to aforesaid properties is ordered to be lifted. Meaning thereby, the order of attachment shall be substituted by the aforesaid fixed deposit. However, the same shall be without prejudice to the rights and contentions of the respective parties in the proceedings to be initiated before the Appellate Authority.
SLP disposed off.
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2022 (9) TMI 1591 - DELHI HIGH COURT
Seeking release on bail - overlooking the provisions of Section 45 of the Prevention of Money Laundering Act, 2002, while granting bail - illegal transplant of human organ - HELD THAT:- The Court acknowledged the need for a detailed hearing on the matter and directed the production of case diaries for the next hearing date. The respondent was given two weeks to file a response, with an advance copy to the petitioner. The case was listed for further proceedings on 12th October, 2022.
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2022 (9) TMI 1590 - SUPREME COURT
Seeking relief of declaration of ownership and perpetual injunction in respect of the suit property -Transactions of sale - Mutation of names in revenue records - Loan transactions and Ownership - Original Plaintiff adopted by Baliram - HELD THAT:- Admittedly, evidence was adduced at the trial. The Original Plaintiff examined himself as witness and examined five other witnesses. The Original Plaintiff gave evidence of adoption. The second witness Trivenibai, wife of Digamber, the brother of the Original Plaintiff, Chandrabhan stated that there was an adoption ceremony held at the residence of Rambhau. She also stated that the Original Plaintiff Chandrabhan had performed the last rites of Baliram as his adopted son. The other witnesses also deposed that they had attended the ceremony at which the Original Plaintiff Chandrabhan had been given in adoption to Baliram. The Trial Court rejected the contention of the Plaintiff on the ground of contradiction and inconsistencies in the evidence.
In this case, as observed above, evidence had been adduced on behalf of the Original Plaintiff as well as the Defendants. The First Appellate Court analysed the evidence carefully and in effect found that the Trial Court had erred in its analysis of evidence and given undue importance to discrepancies and inconsistencies, which were not really material, overlooking the time gap of 34 years that had elapsed since the date of the adoption. There was no such infirmity in the reasoning of the First Appellate Court which called for interference.
Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal restricted only to cases which involve substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the First Appellate Court.
The questions raised in High Court, did not meet the tests laid down by this Court for holding that the questions are substantial questions of law. We are constrained to hold that there was no question of law, let alone any substantial question of law, involved in the Second Appeal.
The appeal is, for the reasons, as discussed above, allowed. The impugned judgment and order is set aside and the judgment and order/decree of the First Appellate Court in Regular Civil Appeal is restored.
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2022 (9) TMI 1589 - ITAT CUTTACK
Assessment Based on Seized Materials - violation of natural justice - Addition based on estimate basis - HELD THAT:- Foundation on the basis of which the assessment has been done, being the so called extracts from BDJC-27 and CWJ-12, are not available with the department, nor they were provided to the assessee for his rebuttal.
Coming to the appraisal report, though the CIT-DR refers to the same as the excel sheet prepared by the AO, this statement of the AO in his assessment order the comparison with the same with appraisal report, shows that these are nothing but the figures dawn out by the investigation wing in the appraisal report.
The gold bars have been quantified at 98,284.36 gms and the old gold ornaments purchased net weight has been determined at 492.929 gms. The appraisal report, thus, determines the computation of purchases of Cuttack branch for the assessment year 2011-2012 at 126.555 gms whereas the sales have been determined at 50101.66 to be the transfer to the Bhubaneswar branch head office is 8572 gms. Even these are the information relating to the assessment year 2011-2012. The impugned first year of appeal is assessment year 2012-2013. After this excel sheet shows wherein for the assessment year 2012-2013, the net closing stock has been determined at 29,799 gms and in respect of silver in the assessment year 2012-2013, a net negative stock of 11,456 gms has been determined. As against this, the excel chart at page 15 shows positive figures for the four branches of the assessee being, Cuttack, Bhubaneswar, Angul and Guragaon for both gold and silver. On what basis the appraisal report has been prepared showing negative figures are also not known.
Thus, clearly the assessment made is unsupported by any of the seized materials. No stock statement of the inventory as on the date of search is also produced. The revenue has been unable to produce any of the seized material to substantiate any of the figures for any of the assessment years. The so-called “working copy” of the hard disk being BDJC-27 has also not been produced before the Tribunal nor before the ld. CIT(A).
CIT(A) was absolutely right in facts in arriving at the conclusion that the additions have been made in all the three assessment years under consideration in total violation of the principle of natural justice and that the additions have been made clearly on estimate basis. Wfind no error in the order of the ld. CIT(A) which calls for any interference. In these circumstances, the findings of the ld. CIT(A) on the issue for all the three assessment years under consideration, stands confirmed.Decided in favour of assessee.
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2022 (9) TMI 1588 - BOMBAY HIGH COURT
Exemption of Social Welfare Surcharge - Notification No. 24/2015-CUS - Seeking refund of the Social Welfare Surcharge wrongly debited - Merchandise Export from India Scheme (MEIS) / Service Exports from India Scheme (SEIS) scrips - interest - HELD THAT:- An identical issue was considered by this court where the court by order [2022 (8) TMI 1489 - BOMBAY HIGH COURT] disposed the petition. Thus, respondents are directed not to auto debit from petitioner's MEIS and SEIS scrips any amount towards Social Welfare Surcharge.
Moreover, any amount deducted shall be refunded to petitioner within 8 weeks of receiving an application from petitioner for refund. Mr. Sridharan states that necessary application for refund to justify the quantum of refund will also be filed. Refund shall be issued together with interest thereon in accordance with law.
Petition disposed.
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2022 (9) TMI 1587 - CESTAT HYDERABAD
Whether demand of service tax rightly confirmed on liquidated damages/penalties recovered by the Appellant u/s 66E (e) of the Finance Act 1994 - Appellant is a PSU - Manufacture of heavy power electrical equipment - HELD THAT:- The Tribunal in South Eastern Coalfields Ltd vs Commissioner of Central Excise & Service Tax [2020 (12) TMI 912 - CESTAT NEW DELHI] observed that such amounts collected by way of penalty/liquidated damages for non-compliance of contract, cannot be considered as consideration for tolerating an act and hence, not leviable to service tax u/s 66E (e) of the Finance Act. The contracts nowhere provided obligation on the assessee to refrain from an act or tolerate an act or a situation and flow of consideration thereof. Such liquidated damages/penalty cannot be considered as receipts towards any service per say, since neither assessee is carrying on any activity to receive compensation nor there can be an intention of other party to breach or violate the contract and suffer a loss. This Tribunal relied on the ruling of Hon'ble Supreme Court in Tara Chand vs Balkishan [1963 (1) TMI 46 - SUPREME COURT].
Thus, we find that the issue herein is squarely covered in favour of the Appellant-assessee by the precedent order of this Tribunal in South Easter Coal Field Ltd vs CCE and ST (supra). Accordingly, we allow the appeal and set aside the impugned order. The appellant shall be entitled to consequential benefits, in accordance with law.
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2022 (9) TMI 1586 - ANDHRA PRADESH HIGH COURT
Seeking declaration of action of the 1st respondent in not taking any action against the letter filed by the petitioner on 20.12.2015 enclosing the H Forms post assessment for the period 2011-12 (CST), as illegal - HELD THAT:- The present Writ Petition is disposed of directing respondent No.1 to deal with the representation made by the petitioner on 20.12.2015 in accordance with law and keeping in view the law laid down by the Courts. There shall be no order as to costs.
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2022 (9) TMI 1585 - ITAT DELHI
Equipment/process royalty receipts - consideration received by the assessee for providing bandwidth services to Indian Telecom Operators outside India - assessee is a company incorporated in Singapore engaged in the business of providing digital transmission of data through International Private Line (‘IPL’) or Multi-Protocol Label Switching (‘MPLS’), etc. to facilitate high-speed data connectivity [bandwidth services outside India to its customers] - whether the bandwidth services are covered as “Equipment Royalty” or “Process Royalty” under Article 12 of the India, Singapore Tax Treaty? - HELD THAT:- We find that the issue in appeal has been decided in favour of the assessee by the Tribunal in [2020 (10) TMI 604 - ITAT DELHI] holding that the consideration received by the assessee company for the bandwidth services to various Indian Telecom Operators like Bharti Airtel India the services provided outside India is not taxable as “Royalty” in view of the beneficial provisions of DTAA between India – Singapore.
We allow the grounds of appeal raised by the assessee and direct the AO to delete the additions made on account of “Royalty”. Appeal of the assessee is allowed.
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2022 (9) TMI 1584 - DELHI HIGH COURT
Compliance with the conditions as prescribed in Section 583 of the Companies Act, 1956 - respondent is a foreign company not registered in India - HELD THAT:- List on 5th December, 2022.
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2022 (9) TMI 1583 - CESTAT MUMBAI
Application for conversion of shipping bills - time limitation prescribed in the circular no. 36/2010-Cus - Obligation under the ‘advance authorisation scheme’ - seeking coverage under schemes of the Foreign Trade Policy - conversion of ‘shipping bills’ fall into five broad categories: from ‘free’ to ‘drawback’, ‘free’ to ‘scheme’, ‘scheme’ to ‘drawback’. ‘drawback’ to ‘scheme’, and ‘scheme’ to ‘scheme’ - HELD THAT:- According to the appellant, the intent of the impugned exports as being in discharge of obligation under the ‘advance authorisation scheme’ of the Foreign Trade Policy is evident from the shipping bills and it is merely the title of the said bills that is stated to require alteration for enabling the appellant herein to remedy the defect pointed out by the licensing authority under the Foreign Trade Policy. Any further processing of their claim before the licensing authority arises under the Foreign Trade (Development & Regulation) Act, 1992 which, even if envisaging clearance from customs authorities for a decision on the closure of the said authorizations is, yet, an event of the future with no relevance on the request made before the competent authority u/s 149 of Customs Act, 1962 and should not have been a criterion for deciding upon the said request.
In view of the settled position, elaborated in Haldiram Foods International Pvt Ltd.[2020 (12) TMI 1229 - CESTAT MUMBAI], on the irrelevance of the deadline stipulated in the circular of Central Board of Excise & Customs (CBEC) relied upon in the impugned order, we set aside the rejection of the applications for amendment and direct the original authority to decide the matter afresh within the framework of section 149 of Customs Act, 1962 on the propriety of the changes sought for in the shipping bills.
Appeal is, accordingly, disposed off.
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2022 (9) TMI 1582 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI
Direction to place the Respondents resolution plan before the Appellant for consideration - whether the Respondents No.1 to 3 after expressing their inability to submit the Resolution Plan vide their email dated 06.11.2019 can again submit the Resolution Plan after lapse of more than 5 months and that to after approval of the Resolution Plan by the CoC in accordance with law? - HELD THAT:- In the instant case, the Respondents have failed to submit the resolution plan within the time, therefore there is no immunity to the respondents to file beyond the time prescribed. The RP rightly rejected the request of the Respondents - The Respondents failed to establish that the ‘RP’ violated the CIRP process. It is only the case of the Respondents such averments allegations have been made and the ‘Adjudicating Authority’ without going into the reality simply ratified the submissions of the Respondents, which this ‘Tribunal’ highly deprecate the said stand.
In the present case, the case of the Respondents is that despite submission of resolution plan beyond the CIRP period and much later to the last date of submission of plans, sought a direction to the RP to place its / their plan before the CoC. Therefore, the Respondents are not at all to be considered as PRAs since they have backed out from submission of the plan and intend to make an entry in to the CIRP belatedly even beyond the period of CIRP.
In view of the decisions of the Hon’ble Supreme Court in Ebix Singapore, ‘Committee of Creditors’ of Essar Steel India [2019 (11) TMI 731 - SUPREME COURT] and this Tribunal judgment in M/s Renganayaki [2021 (4) TMI 776 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] and in Union Bank of India [2022 (1) TMI 1182 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], this ‘Tribunal’ comes to an irresistible and inescapable conclusion that the ‘Appellant’ has made out a ‘prima-facie’ case to be interfered with the order passed by the ‘Adjudicating Authority’, whereby the ‘Adjudicating Authority’ exceeded its jurisdiction in directing the ‘Resolution Professional’, to place the ‘Resolution Plan’ of the Respondent Nos.1 to 3, before the Committee of Creditors, amounts to interfering with the Commercial Wisdom exercised by the Committee of Creditors, more particularly absence of any material irregularity and violation of any Law for the time being enforce.
This Tribunal comes to a resultant conclusion that the impugned order by the Adjudicating Authority, (National Company Law Tribunal, Bengaluru Bench) is an illegal one and hence, the same is set aside, to secure the ends of justice. Accordingly, the Company Appeal is allowed.
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2022 (9) TMI 1581 - RAJASTHAN HIGH COURT
Restoration of mining operation and business of the petitioner by issuing e-ravanna - refrain from creating any hindrance or obstruction in the mining operation - no prior notice before inspection was given - HELD THAT:- Submission of the learned senior counsel for the petitioner that entire exercise undertaken by the respondents is bad in law inasmuch as no prior notice before inspection was given to it, does not merit acceptance as this Court is not satisfied that before carrying out inspection of the petitioner's mine, any prior notice was required. In absence of any statutory provision under the Rules of 2017 mandating so, the respondents were at liberty to carry out surprise inspection.
This Court is also not satisfied that no demand could have been based on the inspections carried out in absence of authorised representative of the petitioner firm inasmuch as the inspection on both the occasions was carried out in presence of Shri Anil Parashar, who, undoubtedly, was a representative of the petitioner as is revealed from the supplementary agreement dated 24.1.2019 executed between the parties wherein, Shri Parashar has stood as a witness on behalf of the petitioner-firm as also from the fact that the documents obtained by Shri Anil Parashar under the RTI Act, 2005, have been relied upon by the petitioner firm to substantiate the averments made in the writ petition. Therefore, this Court has no hesitation in holding that inspections were carried out in presence of representative of the petitioner firm.
This Court is not satisfied with the contention of learned State Counsel that since the demand raised vide order dated 11.8.2020 was maintained vide order dated 30.12.2021, they were required neither to supply a copy of the inspection report dated 9.4.2021 to the petitioner firm nor, to issue any show cause notice or afford it an opportunity of hearing before passing the order dated 30.12.2021. This specious argument is rather reflective of pre-determination of the respondents in maintaining the penalty imposed vide order dated 11.8.2020 - in the considered opinion of this Court, the respondents were under an obligation not only to supply the petitioner a copy of the inspection report dated 9.4.2021; but, also to afford it an opportunity of hearing before passing the order dated 30.12.2021.
The order dated 30.12.2021 as also the order dated 11.8.2020 are quashed and set aside - Petition allowed.
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2022 (9) TMI 1580 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Eligibility to be a resolution applicant in view of Section 29A(f) of the Insolvency and Bankruptcy Code, 2016 - proceedings under Section 29-A(f) of the Code has been carried out against the Appellant on the basis of notice of BSE dated 28.03.2018 - falls under the scope of Section 11(4) of the SEBI Act, 1992 - opportunity of hearing not provided - violation of principle of natural justice (Audi alterm partem) and is also violation of Section 11(4) of the SEBI Act, 1992.
HELD THAT:- Section 29(A)(f) of the Code provides that “A person not eligible to be resolution applicant: (f) is prohibited by the securities and exchange board of India from trading in securities or accessing the securities markets.” The Appellant in this case has been categorically debarred for the reasons that it failed to comply with the mandatory direction issued by the SEBI in the circular dated 10.10.2016 and 01.08.2017 by which the Appellant was repeatedly cautioned that in case, one of the option is not exercised within the time line prescribed, the necessary action shall be taken as prescribed in clause 6 of the circular dated 10.10.2016.
The argument of Counsel for the Appellant not impressed upon that the SEBI was required to follow the provisions of Section 11(4) of the Act before initiating the action in terms of circular dated 10.10.2016 and 01.08.2017 as the said action has been taken in terms of Section 11(1) of the Act.
Reference could be had to be the decision of the Hon’ble Supreme Court in the case of Sahara India Real Estate Corporation Limited & Ors. [2012 (9) TMI 374 - SUPREME COURT] in which it was held that sub-section (2) is subservient to sub-section (1) of section 11. Therefore both sub-sections (2A) and (4) will inferentially be subservient to sub-section (1) of section 11 of the SEBI Act. Therefore, the obligation cast on SEBI, to protect the interest of investors in securities, to promote the development of the securities market, and to regulate the securities market " by such measure as it thinks fit", remains undiluted even by subsections (2A) and (4) of Section 11 of the SEBI Act.
Counsel for the Appellant has submitted that there is no delegation of power by SEBI to BSE which is required to be done in accordance with Section 19 of the Act but in this case, it is opined that BSE has passed on the information to the Appellant by the impugned notice that it had been declared as non-compliant of Section 29(A) (f) of the Code in view of its act and conduct considered by the SEBI in pursuance of the circulars dated 10.10.2016 and 01.08.2017 and has exercised power under Section 11(1) of the Act. It is also a fact that the Appellant had admitted that it is barred in the list of BSE from accessing the security market for 10 years and when the resolution plan was submitted on 28.01.2019 and the Appellant was ineligible in view of Section 29(A) (f) of the Code.
The impugned order does not require any interference as there is no merit in these appeals and hence, the same are hereby dismissed.
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2022 (9) TMI 1579 - SC ORDER
Time limitation of proceedings as financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 - calculation of time period - HELD THAT:- The company had paid a sum of Rs.49,50,000/- on 19.12.2016, amounting to acknowledgment of debt - the period of three years has to be calculated from the said date.
Reliance is placed on a Judgment of this Court in SESH NATH SINGH & ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [2021 (3) TMI 1183 - SUPREME COURT], wherein this Court has held We see no reason why Section 14 or 18 of the Limitation Act,1963 should not apply to proceeding under Section 7 or Section 9 of the IBC. Of course, Section 18 of the Limitation Act is not attracted in this case, since the impugned order of the NCLAT does not proceed on the basis of any acknowledgment.
The order passed by the National Company Law Appellate Tribunal is clearly erroneous in law. The same is set aside and the order of the National Company Law Tribunal dated 27.08.2019 is restored. The appeal is, accordingly, allowed.
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2022 (9) TMI 1578 - CESTAT HYDERABAD
Denial of CENVAT Credit - input services - insurance services under group Medishield policies and personal accident policies provided to its employees and their families - period January, 2006 to July, 2007 - penalty u/s 78 of FA - HELD THAT:- The service on which Cenvat credit is admissible must fall in the same category as the listed services. Medical insurance does not fall in that list and is also not similar to the services indicated in that list. Therefore, the appellant is not entitled to Cenvat credit. He relies on the judgment of the Hon’ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II VERSUS M/S CADILA HEALTH CARE LTD. [2013 (1) TMI 304 - GUJARAT HIGH COURT].
The issue of Cenvat credit on insurance services provided to the employees has been dealt with by the Larger Bench of this Tribunal in the case of M/S. RELIANCE INDUSTRIES LTD., VADODRA VERSUS COMMISSIONER CENTRAL EXCISE & SERVICE TAX (LTU) , MUMBAI [2022 (4) TMI 1357 - CESTAT MUMBAI (LB)] and it has been held that Cenvat credit is available on the service tax paid on such premium. Reliance Industries Ltd dealt with the question whether such premium was paid for insurance of not the employees but those who have opted for voluntary separation scheme announced by the company. In other words, the persons who would benefit from this insurance premium will cease to be employees of the company in that case. In the present case, the claim of the appellant is on a much better footing, inasmuch as the premium in this case is paid for medical insurance of its own employees and their families.
The impugned order cannot be sustained and needs to be set aside - Appeal allowed.
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2022 (9) TMI 1577 - ITAT MUMBAI
Disallowance of interest expenditure attributable to earning of exempt income - HELD THAT:- Respectfully following the decision in assessee’s own case for the A.Y. 1997-98.we allow ground raised by the assessee wherein as held Commissioner (Appeals) has recorded a categorical factual finding that the interest bearing funds have no nexus with the investment made in tax free bonds. Further, he has also recorded a finding of fact that the assessee had sufficient own fund to make investment in tax free bonds. The aforesaid factual finding of the first appellate authority has not been controverted by the Revenue through any substantive evidence brought on record.- Decided against revenue.
Nature of expenses - Expenditure on refurbishment of premises and software - AR submitted that the bank incurred expenditure towards electrical fittings, false ceiling, interiors, temporary fittings, paintings wooden partition, flooring etc. and it is essential for the Bank to incur such expenses for proper ambience as it is in a customer centric industry - HELD THAT:- We observed that Hon'ble Supreme Court in the case of Madras Auto Services Pvt. Ltd. [1998 (8) TMI 1 - SUPREME COURT] on similar issue adjudicated in favour of the assessee as held looked upon expenditure which did bring about some kind of an enduring benefit to the company as a revenue expenditure when the expenditure did not bring into existence any capital asset for the company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount.
In all these cases, the expense has been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. In the present case also, since the asset created by spending the said amounts did not belong to the assessee but t he assessee got the business advantage of using modern premises at a low rent, thus saving considerable revenue expenditure for the next 39 years, both the Tribunal as well as the High Court have rightly come to the conclusion that the expenditure should be looked upon as revenue expenditure.- Decided against revenue.
Taxability u/s. 115JA - Assessee is not constituted as a company under the Companies Act - HELD THAT:- As we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 1997-98 and decided the issue in favour of the assessee wherein as held since the assessee is not constituted as a company under the Companies Act, 1956, the provisions of section 115JA of the Act cannot be applied. While doing so, the Bench further observed that since the assessee Corporation is not required to distribute any dividend, it cannot be considered to be a company under the Companies Act, 1956. The facts involved in assessee’s case are more or less identical to the facts of MSEB [2001 (8) TMI 310 - ITAT MUMBAI]. In view of the aforesaid, we hold that the provisions of section 115JA of the Act are not applicable to the assessee. - Decided against revenue.
Denial for deduction of head office expenditure in entirety - restricting the claim u/s. 44C - AR submitted that Deduction of Head Office expenses should be allowed in entirety as per Non Discrimination Article 26 of Tax Treaty between India and UK and not restricting the claim u/s. 44C - AR submitted that discriminatory provisions have to be ignored for foreign/non-resident assessee in view of Tax Treaty - HELD THAT:- We observe that Coordinate Bench in the case of Metchem Canada Inc., [2005 (9) TMI 227 - ITAT BOMBAY-F] considered the similar issue and adjudicated in favour of the assessee as held beyond dispute, only such expenses are to be allowed as a deduction on account of head office expenses as can be fairly allocated to the PE. The only impact of the applicability of non-discrimination clause will be that the scope of deduction under Section 37(1) will not stand curtailed by the restriction placed under Section 44C of the Act. Section 44C has no application in the matter and that the assessee is to be allowed deduction of such head office expenses as can be fairly allocated to the PE. - Decided against revenue.
Non taxability of interest on income tax refund - HELD THAT:- As decided in the case of Avada Trading [2006 (1) TMI 465 - ITAT MUMBAI] any income assessed may become non-taxable by virtue of retrospective amendment and consequently, erroneous assessment can be rectified. Therefore, in our humble opinion, if the interest granted under Section 244A(1) is varied under Sub-section (3) of such section, then the interest originally granted would be substituted by the reduced/increased amount as the case may be -Interest on refund under Section 244A(1) would be assessable in the year in which it is granted and not in the year in which proceedings under Section 143(1)(a) attain finality.
Interest on tax refund be taxed at 10% as per India-UK Treaty - HELD THAT:- As decided in Credit Agricole Indosuez [2015 (6) TMI 974 - BOMBAY HIGH COURT] no fault can be found with the impugned order of the Tribunal in restoring the issue to the Assessing officer to determine / adopt the rate of tax on refund in the light of the relevant clauses of Indo-France DTAA and the decision of Special Bench in Clough Engineering [2011 (5) TMI 562 - ITAT, DELHI].
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2022 (9) TMI 1576 - MADRAS HIGH COURT
Nature of expenditure - Commission paid to the Managing Director - appellant company is following mercantile system of accounting and such method of accounting has been accepted by the department in all the other years - Tribunal held that the expenditure incurred can be treated as Revenue expenditure and not as capital expenditure
HELD THAT:- On a careful perusal of the order of the Assessment Officer, we are of the view that the methodology adopted by the Revenue is perfectly correct for the simple reason that it is not disputed that the amount has been shown as expenditure and that the payment has been made to the Managing Director. However, the amount has been received by the beneficiary only for the subsequent Assessment Year, which does not mean that as long as the Appellant has not shown the payment in the Books of Accounts in respect of liability, it cannot be stated that the expenditure was incurred during 2004-2005 as such expenditure would be ratified only after Board's meeting.
We have no other option, but to dismiss this Appeal. Accordingly, this Tax Case Appeal is dismissed and the question of law answered against the Assessee and in favour of the Revenue.
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