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2019 (9) TMI 1706
Legality of Award passed by the Arbitrator - rate of interest awarded by the arbitrator at the rate of 18% per annum - HELD THAT:- In the absence of agreement to the contrary between the parties, Section 31(7)(a) of the said Act confers jurisdiction upon the Arbitral Tribunal to award interest unless otherwise agreed by the parties at such rate as the Arbitral Tribunal considers reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arises and the date on which the award is made - In the present case, the parties have agreed for the rate of interest at 18% per annum. However, since the award is of the year 1999 and considering the facts that the learned Senior Counsel had left the matter to the discretion of the court - in exercise of the power Under Article 142 of the Constitution of India, the interest at the rate of 18% awarded by the Arbitral Tribunal is to be reduced.
Considering the fact that the contract relates to construction of Advanced Pediatrics Centre of the Post Graduate Institute of Medical Research and Education, Chandigarh and also other facts and circumstances of the case, in exercise of the power Under Article 142 of the Constitution of India, the orders of the learned Arbitrator as affirmed by the High Court so far as the rate of interest is concerned is modified and the same is reduced from 18% to 10% per annum simple interest. The award amount along with the accrued interest at the rate of 10% per annum simple interest shall be payable to the Respondent-Company within eight weeks from today failing which the entire award amount will carry interest at the rate of 18% as awarded by the Tribunal.
Appeal disposed off.
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2019 (9) TMI 1705
Validity of Garnishee notice issued under Section 39 of the Puducherry Value Added Tax Act, 2007 - it is contended that before issuing Garnishee notice to the concerned Bank, which is not made as a party in this writ petition, the petitioner was not put on notice - violation of principles of natural justice - HELD THAT:- This writ petition not entertained on the ground raised by the petitioner as if they are entitled to prior notice before issuing Garnishee notice. It is not in dispute that the order of assessment dated 14.09.2018 was already passed and therefore, if the petitioner is aggrieved against the said order, they have to work out their remedy by challenging the said order before appropriate forum in the manner known to law. Without doing so, the petitioner has come forward to challenge the consequential Garnishee notice, which in my considered view, cannot be entertained as a proper course of action.
The petitioner is not entitled to prior notice before issuing Garnishee notice under Section 39 of the Puducherry Value Added Tax Act, 2007 - petition dismissed.
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2019 (9) TMI 1704
Succession to the property of a Goan situate outside Goa in India - governed by the Portuguese Civil Code, 1867 as applicable in the State of Goa or the Indian succession Act, 1925?
Whether the Portuguese Civil Code can be said to be a foreign law and the principles of private international law are applicable? - HELD THAT:- The Portuguese law which may have had foreign origin became a part of the Indian laws, and, in sum and substance, is an Indian law. It is no longer a foreign law. Goa is a territory of India; all domiciles of Goa are citizens of India; the Portuguese Civil Code is applicable only on account of the Ordinance and the Act. Therefore, it is crystal clear that the Code is an Indian law and no principles of private international law are applicable to this case. We answer question number one accordingly.
It is important to note that this Court held that in so far as the continuance of old laws is concerned, the new sovereign is not bound to follow the old laws.
Whether the property of a Goan domicile outside the territory of Goa would be governed by the Code or by Indian Succession Act or by personal laws, as applicable in the rest of the country e.g. Hindu Succession Act, 1956, Muslim Personal Law (Shariat) Application Act, 1937, etc.? - HELD THAT:- It is a well settled principle of statutory interpretation that when there is a conflict between the general law and the special law then the special law shall prevail. This principle will apply with greater force to special law which is also additionally a local law. This judicial principle is based on the latin maxim generalia specialibus non derogant, i.e., general law yields to special law should they operate in the same field on the same subject.
As far as Goa is concerned, there is a specific judgment in this regard i.e. Justiniano Augusto De Piedade Barreto and Ors. v. Antonio Vicente Da Fonseca and Ors., [1979 (3) TMI 208 - SUPREME COURT] though relating to the interpretation of Section 29 of the Limitation Act, 1963, which deals with local and special laws. Dealing with the issue of the Portuguese Civil Code, the Court held that it could not escape from reaching the conclusion that the Portuguese Civil Code is a local law within the ambit of Section 29(2) of the Limitation Act, 1963. A special law is a law relating to a particular subject while a local law is a law confined to a particular area or territory. In our considered view, the Portuguese Civil Code, in matters of succession, is both a special law and a local law. It is special and local because it deals with laws of succession for the domiciles of Goa only.
The Portuguese Civil Code being a special Act, applicable only to the domiciles of Goa, will be applicable to the Goan domiciles in respect to all the properties wherever they be situated in India whether within Goa or outside Goa and Section 5 of the Indian Succession Act or the laws of succession would not be applicable to such Goan domiciles.
What is the effect of the grant of probate by the Bombay High Court in respect of the Will executed by JMP? - HELD THAT:- The jurisdiction of a probate court is limited to decide whether the Will is genuine or not. The Will may be genuine but the grant of probate does not mean that the Will is valid even if it violates the laws of inheritance. To give an example, supposing a Hindu bequeathes his ancestral property by a Will and probate of the Will is granted, such grant of probate cannot adversely affect the rights of those members of the coparcenary who had a right in the property since birth. Similar is the case in Goa. The legitime is the right of the heirs by birth. When both the spouses are alive, they own half of the property. Mere grant of probate will not mean that the husband can Will away more than half of the property even if that be in his name.
This Court in Krishna Kumar Birla v. Rajendra Singh Lodha [2008 (3) TMI 741 - SUPREME COURT] held that grant of probate by the Bombay High Court did not in any manner affect the rights of inheritance of all the legal heirs of the deceased.
Thus, it will be the Portuguese Civil Code, 1867 as applicable in the State of Goa, which shall govern the rights of succession and inheritance even in respect of properties of a Goan domicile situated outside Goa, anywhere in India.
The impugned judgment has to be set aside and the property of late JMP at Bombay is to be included in the inventory of properties in the inventory proceedings in Goa for all intent and purpose - Appeal allowed.
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2019 (9) TMI 1703
Maintainability of appeal - low tax effect - HELD THAT:- Appellants on instructions seek to withdraw the Appeals. This for the reason that the tax effect involved in all these Appeals is less than the threshold limit of rupees one crore provided in the Central Board for Direct Taxes (CBDT) Circular No.17 of 2019 dated 8 August 2019.
All these Appeals are disposed of as withdrawn.
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2019 (9) TMI 1702
Disallowance u/s 14A - expenditure incurred on earning exempt income - HELD THAT:- It is seen that the lower authorities dealt with interest expenditure and that too on proportionate basis in the said case than direct one whereas the issue before us is that of administrative expenditure disallowance. We observe in this facts that the impugned administrative expenses disallowance is not alike former two limbs since falling in different head as well as the fact that it has to be based on computation formula only. There is no dispute that we are dealing with assessment year 2008-09 i.e. starting point of application of Rule 8D of IT Rules. The assessee admittedly has not challenged the relevant computation @ 5% given in the above statutory computation formula. We conclude in these facts that both the lower authorities have acted as per law in invoking the impugned disallowance in relation to assessee's exempt income amounting to Rs.7.7 crores.More so when the assesses has not discharged prima facie onus even to justify its suo-motu lump sum disallowance of Rs.2 lakhs only. The impugned disallowance is accordingly confirmed in principle.
Alternate contention that both the lower authorities have erred in not excluding the average investment made in growth oriented debt funds and fixed maturity plan funds - We find that this is more a computation exercise wherein investment made in relation to taxable income has to be excluded for the purpose of computing disallowance in question. We thus direct the Assessing Officer to frame consequential computation as per law.
TP Adjustment - Financial Guarantee given by the appellant on behalf to its Associate Enterprise (A.E) - HELD THAT:- We find that recent Co-ordinate Bench in M/s Suzlon Energy Ltd.- [2017 (4) TMI 1406 - ITAT AHMEDABAD] wherein as holds that such a guarantee does not amount to an international transaction under section 92BTPO had himself taken financial guarantees given by various institutions as the relevant bench mark for the performance guarantee adjustment in question. We hold in these facts and circumstance assessee’s second substantive ground is accepted.
Disallowance of recruitment and training expenses - Revenue challenged the order passed by CIT (A) in deleting 20% of such expenses - HELD THAT:- As perused the records including the order passed by the co-ordinate Bench in [2013 (4) TMI 995 - ITAT AHMEDABAD] in assessee’s own case whereby and whereunder the issue has been decided in favour of the assessee as held that there is no evidence in the possession of the AO to hold that a particular expenditure on training was not business related. In fact, the argument of the appellant appears to be logical that considering the nature of the services provided a training of the technical staff is always a business necessity and because of the trained staff the appellant's revenue has substantially gone up - direct the AO to delete the disallowance on account of recruitment and training expenses.
Disallowance by restricting the deduction u/s.10A - HELD THAT:- It appears that the issue is squarely covered by the Hon’ble Apex Court in the matter of CIT v/s. Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] wherein it has been held that “section 10A is a deduction section. However, the stage of the deduction would be while computing the gross total income of the eligible undertaking under chapter IV of the Act and not at the stage of computation of the total income under chapter VI”.
It is an undisputed fact that the issue in the present appeal is identical to that of earlier assessment year and the exchange fluctuation gain was held to be arising from export business in assessment year 2001- 02 to 2005-06. Nothing has been brought on record by Revenue to controvert the findings of Ld. CIT(A) and, therefore, we find no reason to interfere in order of CIT(A) on this issue.
Upward adjustment by recomputing the ALP of the international transactions of software services distributed by MUK - HELD THAT:- Based on the facts and evidences provided by the appellant for AY 07-08 [2013 (4) TMI 995 - ITAT AHMEDABAD] and the conclusions of the ITAT Ahmedabad bench for identical facts for AY 06-07 [2012 (5) TMI 206 - ITAT AHMEDABAD] the appellant's contentions find favour. Therefore, MUK's operations can be considered to be correctly characterized as a distributor and a return based on sales which incentives MUK to generate more revenue appears to be appropriate. Decided against revenue.
Disallowance on account of Human Resource Management function - HELD THAT:- As decided in assessee own case [2012 (5) TMI 206 - ITAT AHMEDABAD] A. V. 2006-07 facts and figures have revealed that following the said business strategy the business growth as a whole was much higher than the impugned compensation amount. This allegation is also to be ruled out that those very employees were otherwise regular employees of the assessee-company and they have been absorbed after their return for the period for which they were sent abroad and worked "offshore" with AEs. It is true that such employees are the regular group of experts but they have been paid by AEs when worked on-site abroad, which means the burden of salary for the "offshore" period was in fact borne by AEs, otherwise to maintain bunch of trained employees the MIL had to incur the expenditure on salary. Therefore, there was an argument of counter claims and in support reliance was placed on Boston Scientific International VV [2010 (4) TMI 876 - ITAT MUMBAI]. For these reasons we also hold that the secondee-provider is not akin to recruitment service-provider or that "secondment" is different from "recruitment". Finally, we hold that there was no legal basis for the impugned upward adjustment and the same is hereby directed to be deleted. This ground is allowed.
Disallowance computed u/s.14A r.w.Rule 8D(2)(iii) while computing the Book Profit u/s 115JB - HELD THAT:- We note that in the recent judgment passed in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Act.
Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB.
TP Adjustment - Comparable selection - determining the arm’s length price of the international transaction of provision of software services rendered by P &C Division of the appellant to its AE - HELD THAT:- As decided in Revenue’s appeal [2018 (3) TMI 1881 - ITAT AHMEDABAD] excluding two entities M/s. Accentia Technologies Limited and M/s. Cross Domain Solutions Limited. very entities are not to be taken as comparables since the former one underwent extra ordinary merger event whereas the latter entity provided high-end KPO services.
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2019 (9) TMI 1701
Validity of Arbitral Award - petition dismissed on the ground that this Court does not have the territorial jurisdiction to entertain the petition - Section 34 of the Arbitration Act.
HELD THAT:- It is a well-settled principle of interpretation that the clauses of the Contract have to be read and interpreted upon a plain reading. The explicit terms of a contract are always the final word with regards to the intention of the parties and the multi-clause contract inter se the parties has to be understood and interpreted in a manner that any view, on a particular Clause of the contract, should not do violence to another part of the contract - It is also to be noted that filling in the name of another city before conjunction 'or' would have rendered the exclusivity of jurisdiction ambiguous. "New Delhi" was certainly one of the firmed-up choice of venue and seat, agreed between the parties. Introduction of another place was certainly a selection that the parties could have made, but since parties did not avail this opportunity, it only means that the agreed place was preserved as final.
In the case of M/S. SWASTIK GASES P. LTD. VERSUS INDIAN OIL CORP. LTD. [2013 (7) TMI 642 - SUPREME COURT], the Supreme Court held that where the ouster is included in an agreement between the parties, it conveys the intention to exclude the jurisdiction of Courts other than those mentioned in the agreement. The Supreme Court also held that absence of the use of words like "alone", "only", "exclusive" or "exclusive jurisdiction" is not decisive, and does not make any material difference in deciding the jurisdiction of a Court. The intention of the parties has to be gathered from the Clauses appearing in the agreement.
In view of the aforesaid decisions of the Supreme Court and the principles laid down therein, it clearly emerges that Section 20 (1) and Section 20 (2) of the Arbitration Act, would be applicable to the place where seat/place of arbitration is fixed under the Contract. The venue relates to convenience of parties, and in such a case, Section 20 (3) of the Arbitration Act is applicable - even if there was any element of ambiguity or doubt with respect to intention of the parties regarding "exclusivity", the same gets settled by conscious decision of the parties not to fill in the blank. In this case the venue shifted to Thane not on account of an agreement between the parties, but just because the supplier was located in a jurisdiction that fell with the domain of the regional MSME council. That does not however mean that the arbitration was seated at Thane. For jurisdiction, the clause agreed between the parties continues to be valid and binding.
In the present case, both the VENUE as well as the SEAT (by way of the jurisdiction clause) has been agreed to be at New Delhi. There are no hesitation to say that the Courts at Delhi would have the jurisdiction to entertain the petition challenging the award passed by the MSME Council. Since the parties agreed to confer exclusive jurisdiction to Courts at New Delhi, notwithstanding the fact that the purchase order in question dated 10th March 2016, was issued by the Petitioner from its Vadodara Office to the Respondent at Navi Mumbai, and even if no cause of action has arisen in Delhi, the Courts of Delhi would have jurisdiction to entertain the petition under Section 34 of the Arbitration Act.
Undoubtedly, the MSME Act is a special legislation dealing with Micro, Small and Medium Enterprises and would have precedence over the general law. There are decisions of several Courts holding that the provisions of MSME Act would override the provisions of the Contract between the parties - the jurisdiction of the MSME Council which is decided on the basis of the location of the supplier, would only determine the 'VENUE', and not the 'SEAT' of arbitration. The 'SEAT' of arbitration would continue to be governed in terms of the arbitration agreement between the parties, which in the present case as per jurisdiction Clause No. 35 is New Delhi.
The writ petition filed by the Appellant before the Bombay High Court was against the MSME Council, and filing of the said petition would not oust the jurisdiction of the Court to deal with petition under Section 34 of the Amendment Act and accordingly, the contention of the Respondent that the filing of the aforesaid writ petition bars the Appellant to approach this Court is rejected.
The present petition restored to its original number.
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2019 (9) TMI 1700
Disallowance of Misc. construction expenses - Addition on estimated basis - failure of the assessee in producing supporting bills and vouchers - HELD THAT:- It is a well-established principle that ad hoc disallowance made by an Assessing Officer without proper verification of the facts is bad in law and in gross violation of the principles of natural justice.
Scheme of the Act does not authorize the Assessing Officer to make a disallowance according to his wishes, rather it provide that he should first point out the defects in the accounts of the assessee.
In the instant case, since ad hoc disallowance is made by making general observation, we do not find any merit in the addition made by the AO, That being so we decline to interfere in the order passed by ld CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed.
Depreciation on goodwill - goodwill as acquired during merger - As per AO goodwill is not reflected in the post-merger audited financial statement and the tax audit report of the assessee - HELD THAT:- As assessee has submitted that post approval of merger by the Hon’ble High Court of Delhi and Hon’ble Calcutta High court, the audited financial statement for FY 2006-07 clearly reflected the amount of goodwill that arose pursuant to the merger. The same was also filed with the A.O. vide letter dated 21st March, 2014. Though in the tax audit report the tax auditor has not considered the depreciation on goodwill, but the same cannot be the basis of disallowance. We find that such disallowance made by the AO is erroneous. On appeal by assessee, CIT(A) has appreciated the facts of the assessee company and deleted the addition. We decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the grounds of appeal raised by the revenue are dismissed.
Addition on account of bad debts - CIT-A deleted the addition - HELD THAT:- As amount mentioned as opening balance in the details submitted before the AO is the unrealized amount which is nothing but unrealized amounts against invoices raised by the assessee on PWD & IRCON during the FYs 2001-02, 2004-05 and 2005-06 which were offered to tax as income in the earlier years and on becoming irrecoverable, the same has to be allowed as bad debts during the relevant assessment year under the provisions of section 36(1)(vii) of the Act. CIT(A) has rightly deleted the addition made by assessing officer. Decided against revenue.
Unreconciled closing balance - excess liability shown by the assessee company in the books of accounts and thus difference added back to the total income of the assessee - HELD THAT:- We note that the difference in liability is primarily on account of the accounting of service tax. Counsel submits that it is not the case where excess expenditure has been recorded for which liability has arisen. The amount of service tax for which liability is reflected is not claimed by the assessee as an expense - liability so created has subsequently been paid by the assessee. The difference in accounting treatment followed by the both the parties cannot lead to any addition as unexplained liability. Therefore, question of overstating the expenditure of accounting for unexplained purchases does not arise. Decided in favour of assessee.
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2019 (9) TMI 1699
Validity of award - determination of compensation - land acquired without giving any opportunity of hearing to the petitioners land acquired, that too without determining the adequate compensation for the land of the petitioners - violation of principles of natural justice - HELD THAT:- From a simple reading of Sections 3D and 3G of the Act, 1956 it is evident that the purposes of publication of the notice in both the sections i.e. Sections 3D and 3G are entirely different. Under Section 3D there is a declaration of acquisition and after the notification is made in the official gazette, the land vests absolutely in the Central Government free from all encumbrances. After acquiring the land, the next step is determination of compensation. Section 3G(3) again requires that before proceeding to determine the compensation, the competent authority shall give a public notice in two local newspapers, one in vernacular language, inviting claims from all persons interested in the land to be acquired. Sub-section (4) of Section 3G clearly provides that the notice shall give the particulars of the land and an opportunity is to be afforded to the land owner to appear in person or by his agent or by a legal practitioner before the competent authority before determining the compensation.
The scheme of the amendment brought by the Act 16 of 1997, whereby Sections 3A to 3J have been inserted in the Act, 1956, clearly shows that the notification has to be published at three stages: first, under Section 3A(2) declaring intention to acquire the land and inviting objections; secondly, under Section 3D(2) for declaration to the effect that the land should be acquired and on such declaration the land vests absolutely in the Central Government; and thirdly, under Section 3G(3) a public notice is required to be published in two local newspapers inviting the claims from all the persons interested in the land - It is admitted case that only two notices have been published under Sections 3A and 3D of the Act, 1956. No other notice has been brought on the record by the authorities along with the counter affidavit.
A Division Bench of this Court in the case of SHARDA YADAV VERSUS UNION OF INDIA AND 3 ORS. [2014 (7) TMI 1378 - ALLAHABAD HIGH COURT] has considered the similar facts. In that case also, the notice under Section 3G was not issued. The Court held that The award which has been rendered in relation to the agricultural land of the petitioner is clearly in violation of Section 3-G of the Act as the award itself also nowhere recites that any such notice was published in the newspaper as required in the said provision. Consequently, the impugned award dated 30.4.2013 to the said extent is quashed.
The facts of this case are squarely covered by the law laid down by the co-ordinate Bench decision of this Court in Sharda Yadav. Similar argument was raised in that case also that notice under Section 3D be treated as notice under Section 3G. In the present case, it is admitted case of the respondents that by mistake in the notice under Section 3G(3), Section 3D was mentioned but no corrigendum has been issued. Moreover, the respondents have not brought on the record the notice dated 29th April, 2018 in spite of filing a supplementary counter affidavit.
The award dated 19th September, 2018 passed by the second respondent under Section 3G of the Act, 1956 has been passed without following the procedure prescribed under Section 3G(3) of the Act, 1956, hence it is quashed to the said extent - Petition allowed.
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2019 (9) TMI 1698
Taxability of managements fees as ‘Royalty’ - India-Netherlands Treaty - whether payment received by assessee are on account of reimbursement? - HELD THAT:- We have noted that on almost similar set of fact and on the basis of same service agreement between the assessee and VOIPL, the Assessing Officer for A.Y. 2009-10 treated the amount received on account of various services rendered by assessee as royalty, however, on appeal before the Tribunal, the same was held as reimbursement of cost vide order [2016 (11) TMI 1249 - ITAT MUMBAI].
Considering the decision of co-ordinate bench of A.Y. 2009-10 [2016 (11) TMI 1249 - ITAT MUMBAI], which was followed in A.Y. 2013-14 & 2014-15 [2017 (11) TMI 1912 - ITAT MUMBAI] wherein the similar payments received pursuant to the same agreement was treated that payment received by assessee are on account of reimbursement and does not fall under the definition of ‘Royalty’ as defined in Article-12(4) of the India- Netherlands Tax Treaty. Decided in favour of assessee.
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2019 (9) TMI 1697
Estimation of income - bogus purchases - purchase from the grey market - HELD THAT:- Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer.
As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee, as held in the case of Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases.
Thus set aside the matter to the file of the assessing officer with the direction to restrict the addition as regards the bogus purchases by bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases. Assessee's appeal is partly allowed.
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2019 (9) TMI 1696
Scope of Certiorari Jurisdiction - Validity of Award passed by Labour Court - whether NMR workers were entitled to payment of Hydro Allowance at revised rates? - whether NMR workers of the Rengali Unit of the Orissa Hydro Power Corporation, who were being paid medical allowance, were entitled for such allowance at revised rates?
Scope of Certiorari Jurisdiction - HELD THAT:- An erroneous decision in respect of a matter which falls within the authority of the Tribunal would not entitle a writ applicant for a writ of certiorari. However, if the decision relates to anything collateral to the merit, an erroneous decision upon which, would affect its jurisdiction, a writ of certiorari would lie - reliance can be placed in the case of TC. BASAPPA VERSUS T. NAGAPPA [1954 (5) TMI 21 - SUPREME COURT] where it was held that Certiorari may lie and is generally granted when a court has acted without or in excess of its jurisdiction. The want of jurisdiction may arise from the nature of the subject-matter of the proceeding or from the absence of some preliminary proceeding or the court itself may not be legally constituted or suffer from certain disability by reason of extraneous circumstances.
The question arose in DHARANGADHARA CHEMICAL WORKS LTD. VERSUS STATE OF SAURASHTRA [1956 (11) TMI 33 - SUPREME COURT]. The question was whether the finding by the Tribunal under the Act about the party Respondents being workmen was liable to be interfered with. After dealing with various tests relating to determining the issue, this Court also held that It is equally well settled that the decision of the Tribunal on a question of fact which it has jurisdiction to determine is not liable to be questioned in proceedings Under Article 226 of the Constitution unless at the least it is shown to be fully unsupported by evidence.
Application u/s 33A of the Act - HELD THAT:- An application Under Section 33A of the Act is not a civil suit. The provisions of Order VI Rule 4 of the Code of Civil Procedure, as such, is not applicable to proceedings under the Act. Does it mean that the law as to pleadings is not to apply at all to proceedings under the Act or will it be more correct to say that the law as to pleadings will apply but without its full vigor. We would think the latter would be the correct position in law. While the provisions of the Code of Civil Procedure may not apply the salutary principles embodied would apply. This is for the reason that the purpose of pleading, be it in a civil suit or other proceeding, is to allow the opposite party to meet the case of his opponent to ready the evidence to be adduced and marshal the law in support of its case.
The VSS, if availed of by an employee voluntarily, amounts to a contract. This Court, in BANK OF INDIA & ORS VERSUS O.P. SWARNAKAR [2002 (12) TMI 605 - SUPREME COURT], was dealing with the case of voluntary retirement scheme floated by the bank. A question arose as to whether the scheme was an offer or an invitation to treat. After elaborate consideration of the scheme, the Court took the view that having regard to the facts, in particular, the fact that the bank reserved its right to accept or reject the application, the scheme was an invitation to treat. The application made by the employee amounted to an offer and a contract emerged only if the application was accepted by the bank. It was only when the offer of the employee was accepted, it became an enforceable contract, it was held. This aspect assumes significance in the light of the fact that the concept of fraud, undue influence and misrepresentation as defined in the Contract Act, would be apposite in the context of the Scheme giving rise to an enforceable contract.
Findings of the Labour Court - HELD THAT:- The Labour Court found that the application Under Section 33A of the Act is maintainable. This is on the basis that, had the VSS been in the true sense, there would not have been any illegality. It is found that the applicants have challenged the Scheme as illegal and the applications were obtained by misrepresentation. On that basis, it was found that the application was maintainable - It is found that there was no demand from the applicants. There was no proposal from the officials for introduction of the Scheme. The SDO and the Executive Engineer of the Corporation never recommended for reducing staff strength. Admittedly, the Scheme was not published widely for the information of NMRs. Reference is made to the application made by AW1, which we have extracted. On this finding, the Labour Court finds that the Scheme was not the choice of the applicants but it was thrust upon the applicants. This amounted to refusal of employment in the guise of the Scheme. On this basis, the relief was granted.
In the High Court, when application was made Under Section 17B of the Act, the applicants were directed to deposit the amount which they received. 28 applicants deposited the amount which they received under the Scheme. It is not disputed that the said amounts are with the Appellants - The court went on, no doubt, to consider the pay to be given to the NMR workers. The court proceeded to hold "there was no reason for discriminating the NMR employees from other regular employed persons".
The applicants have failed to plead and prove, and on the yardstick of it being a case of no evidence, the Award became infirm and was liable to be interfered with. At any rate, the findings, which have been rendered by the Labour Court, which is to the effect that it was not the choice of the applicants and was thrust upon the complainants amounting to refusal of employment, is completely insupportable both in law and on facts. The finding that there was no demand from the side of the complainants for the introduction of the VSS is completely irrelevant, as, as an employer, it was certainly open to devise such policy which was in the best interest of the Corporation - From the evidence which consists of the testimony of AW1 to AW4, as far as this aspect is concerned, there is no evidence at all. It is true, in the response of the Appellants, it has been pleaded in paragraph-8 that a Scheme has been displayed on the notice board and the same has been widely circulated for information of all concerned. However, the witness for the Appellants, in evidence, has deposed that the VSS was not published in any newspaper. It is stated that it is not published in any newspaper for the information of the general public. He also does say that it is not notified in the Gazette either by the Government or by the Corporation. The second witness for the Appellants also states that implementation was notified on the Office Notice Board. It was made in English and the NMRs were not conversant with English. Nothing was published in Oriya.
Thus, no case was made out before the Labour Court for invoking Section 33A read with Section 33 of the Act. In the case of Writ of Certiorari, no doubt, the Court also bears in mind that it is not axiomatic, or that upon a finding of illegality, a court is bound to interfere. The court may still exercise its discretion and decline jurisdiction unless there is manifest injustice - the Appellants have made out a case of manifest injustice if the Award is allowed to stand.
The appeal is allowed and the judgment of the High Court is set aside. The Award passed by the Labour Court is set aside and the application filed by the applicants is dismissed.
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2019 (9) TMI 1695
Entitlement to claim grant-in-aid as admissible under the Orissa (Non-Government Colleges, Junior Colleges and Higher Secondary Schools) Grant-in-aid Order, 1994, after its repeal in the year 2004 by virtue of provisions contained in Orissa (Non-Government Colleges, Junior Colleges and Higher Secondary Schools) Grant-in-aid Order, 2004 - private educational institution - applications not made within time limit prescribed - HELD THAT:- It is crystal clear from the scheme of the Order of 1994 that grant-in-aid has to be claimed within the period prescribed and the Director on good and sufficient cause shown may extend the period, otherwise it cannot be claimed. Even after completion of 5 years and 3 years period, as the case may be, there is no automatic accrual of right for receiving grant-in-aid. It is dependent upon the opinion of Director which educational institution/institutions shall be the best to cater to the need of the area.
The employees have filed representations to claim grant-in-aid under Order of 1994 belatedly for the first time in the year 2011-12 that too according to the directions of the High Court, which were rejected. Thereafter, they approached the Tribunal by way of filing original applications, whereas on completion of the qualifying period, the institution has to inform the Director to claim grant in aid. There is no material on record that the institutions have duly applied in the particular academic year and within the time fixed for making application as per the Order of 1994 and there is nothing on the record indicating that the requisite information was furnished. No such supporting documents have been placed on record - Fact remains that there is no order placed on record whether such prayer if any made by the institution had been rejected as per the Order of 1994. The representations which have been placed on record are of 2011-12, as the grant-in-aid is annual, dependent upon economic limits and financial viability of the State Government, it was too late in the day to file the original applications or writ petitions in the year 2011-12, claiming the benefit of grant-in-aid under the Order of 1994. In case employees/institutions were desirous of obtaining grant-in-aid under the Order of 1994, they ought to have taken the steps within the reasonable time in view of the fact that it cannot be claimed as a matter of right, but it depends upon annual budget and fulfilment of various factors as contained in the provisions of the Order of 1994.
The original applications filed belatedly after the repeal of the Order of 1994, could not have been entertained at all and the employees filing the applications after repeal of Order of 1994, cannot be said to be entitled for any relief owing to laches having slept over their right, if any, available under the Order of 1994.
Effect of the repeal of the Order of 1994, by the Order of 2004 - HELD THAT:- In case a college is receiving grant-in-aid, with respect to a post, shall continue to receive it under the Order of 1994, however, in case it was not receiving the grant-in-aid as saving of the Order of 1994 is only entitled for block grant under Paragraph 3(1), not eligible for receiving the grant-in-aid under the Order of 1994. The saving of Order of 1994 is for a limited purpose that the institution shall continue to receive grant-in-aid concerning the posts which had been sanctioned before the repeal of the order of 1994.
In the present case, it is apparent that there is no absolute right conferred under the Order of 1994. The investigation was necessary for whether grant-in-aid to be released or not. It was merely hope and expectation to obtain the release of grant in aid which does not survive after the repeal of the provisions of the Order of 1994. Given the clear provisions contained in Paragraph 4 of the Order of 2004, repealing and saving of Order of 1994, it is apparent that no such right is saved in case grant-in-aid was not being received at the time of repeal. The provisions of the Order of 1994 of applying and/or pending applications are not saved nor it is provided that by applying under the repeal of the order of 1994, its benefits can be claimed. Grant was annual based on budgetary provisions. Application to be filed timely. As several factors prevailing at the relevant time were to be seen in no case provisions can be invoked after the repeal of the order of 1994. Only the block grant can be claimed.
It is apparent on consideration of Paragraph 4 of order of 2004 that only saving of the right is to receive the block grant and only in case grant in aid had been received on or before the repeal of the Order of 2004, it shall not be affected and the Order of 1994 shall continue only for that purpose and no other rights are saved.
The orders passed by the Tribunal and the High Court in favour of employees are not sustainable - The appeals filed by the State of Orissa are allowed and that of employees are hereby dismissed.
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2019 (9) TMI 1694
TP Adjustment in respect of the payment of interest to related parties - interest paid to the related parties is at 15% per annum whereas the interest paid to the unrelated parties varies from 13.20% to 15.60% - assessee claimed that the Specified Domestic Transaction interest to the related parties at 15% is at Arm’s Length - HELD THAT:- We find that for rejecting the Internal CUP as most appropriate method by the TPO, no plausible reason have been given except the statement that for the purpose of benchmarking, he proposed External CUP as most appropriate method. Once the transaction of interest paid to the unrelated parties is available on record, then the Internal CUP should be preferred as against the External CUP as most appropriate method for determination of Arm’s Length Price. Assessee has paid interest to 16 related parties and 15 unrelated parties. Therefore, almost equal numbers of transactions of payment of interest to related parties as well as unrelated parties have been entered into by the assessee during the year under consideration.
Once the average effective rate of interest paid to the unrelated parties is not in dispute at 15.36%, then the Specified Domestic Transactions of payment of interest to the related parties have to be tested with the Internal CUP being average rate of interest paid to the unrelated parties.
The assessee has also taken a plea before the authorities below that the payment of interest to the unrelated parties is bi-monthly/quarterly as against annually to the related parties. This is also a cost adding factor in respect to the unrelated party payment of interest.
Assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm’s Length. It is also pertinent to note that even by applying the Arm’s Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted.
Disallowance of Employees Contribution to PF & ESI paid after the due date as provided under the relevant Acts. However, it was paid before the due date of filing the return of income under section 139(1) - HELD THAT:- As this issue is decided in favour of the assessee and the addition made by the AO on account of payment of employees contribution to PF and ESI before the due date of filing the return under section 139(1) is deleted.
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2019 (9) TMI 1693
TP Adjustment - Comparable selection - turnover filter - HELD THAT:- In the case of Genisys Integrating Systems (India) P Ltd [2011 (8) TMI 952 - ITAT BANGALORE] has relied upon the opinion expressed by Dun and Bradstreet that the grouping of companies having turnover of Rs.1.00 crore to Rs.200 crores as comparable with each other was held to be proper. Since certain decisions were rendered divergent views expressed by various benches in the case of Autodesk India (P) Ltd (2018 (7) TMI 1862 - ITAT BANGALORE] and expressed the view that the CIT(A) was right on the issue of application of turnover filter by following the ratio laid down in the case of Genisys Integrating Systems (India) P Ltd (2018 (7) TMI 1862 - ITAT BANGALORE]
In the instant case, the assessee seeks exclusion of above said five companies by applying turnover filter as per the ratio laid down in the case of Genisys Integrating Systems (India) P Ltd (supra). Appeal of the assessee is treated as allowed.
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2019 (9) TMI 1692
Deduction u/s 80IA - activities undertaken by the assessee do not fall within clause (d) of the explanation no section 80IA(4) defining the term infrastructure facilities - ITAT allowed deduction - HELD THAT:- The impugned order of the Tribunal allowed Respondent- Assessee’s appeal, inter alia, placing reliance on the decision of the Delhi High Court in the case of Container Corporation of India Ltd. v. Asstt. Commissioner of Income Tax [2012 (5) TMI 260 - DELHI HIGH COURT] and also placing reliance on the decision of this Court in the case of C.I.T. v. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT]
Appellant very fairly states that the view taken by the Delhi High Court in the case of Container Corporation of India Ltd. (supra) and by this Court in the case of Continental Warehousing Corporation (supra) has been upheld by the Apex Court in the case of CIT v. Continental Warehousing Corporation [2018 (5) TMI 359 - SUPREME COURT] No substantial question of law.
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2019 (9) TMI 1691
Refund of Service tax paid - various specified services used in or in relation to authorized operation in the SEZ - applicability of Notification No.9/2009-ST, dt.03.03.2009 as amended vide Notification No.15/2009-ST, dtd. 20.05.2009 - HELD THAT:- The club or association service is initially not included in the approved list, but later forming a part of the approved list. Hence, refund cannot be denied to the Appellant in view of the judgment in the case of Biocon Ltd [2019 (2) TMI 873 - CESTAT BANGALORE].
Similarly, since the service tax paid on life insurance service of the employees of the Appellant being included in the approved list, refund on this count cannot be denied to them in view of the judgment in the case of Tata Consultancy Services Ltd’s case [2012 (8) TMI 500 - CESTAT, MUMBAI].
Also, various input services which are wholly consumed within the SEZ, the service tax paid on such services cannot be denied as refund, in view of the principle of law laid down in the case of Barclays Ltd’s case [2015 (2) TMI 146 - CESTAT MUMBAI].
The impugned order being devoid of merit, is set aside - Appeal allowed.
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2019 (9) TMI 1690
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The objection on the maintainability of Section 7 application cannot sustain, as the order of admission or the order of appointment of liquidator will not create any bar on the applicability of the provisions of IBC to the proceedings instituted under the Code. Till the company is ordered to be wound up i.e. the final dissolution order is passed; Adjudicating Authority can entertain a petition filed under the Code.
In the present case respondent company has acknowledged receipt of Rs. 91,54,819/- disbursed through four RTGS transactions during July 2011. Besides MoU and buyer's agreements were executed between the parties in the year 2011. The applicant was allotted Unit No. 306 & 307 with super area of 3500 sq. ft. at 'Gateway Tower'. The applicant therefore comes within the definition of home buyer. Besides as per the agreement the respondent was liable to pay assured return. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing - Respondent has defaulted in paying the assured returns nor has handed over the possession of the units to the applicant. Moreover, the winding up order passed against the respondent company itself, is a record of default by the respondent corporate debtor. As per the Explanation to sub-section (1) of Section 7 the default can be to any financial creditor to the entity and not restricted to the creditor who triggers the insolvency resolution process.
It is thus seen that the applicant 'financial creditor' has placed on record sufficient evidence in support of the claim as well as to prove the default.
The spirit of the Code encourages resolution as against liquidation. Resolution is the rule; whereas liquidation is to be an exception. The object of the Code is to promote resolution over liquidation. Until option of resolution is exhausted, liquidation ought not to follow and therefore every effort must be made to try and see that resolution is made possible. Liquidation can only be allowed upon failure of resolution process - the petitioner being a financial creditor can invoke Corporate Insolvency Resolution Process under Section 7 of the Code against the respondent corporate debtor (in liquidation) as default in repayment of the financial debt is established.
The present application under Section 7 of the Code for initiative Corporate Resolution Insolvency Process has been filed by petitioner financial creditors in Form-1 in terms of Rule 4 of Insolvency and Bankruptcy (application to Adjudicating Authority) Rules, 2016 accompanied with required information, documents and records as prescribed under the Rules.
Petition admitted - moratorium declared.
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2019 (9) TMI 1689
Chargeability of interest received under the Land Acquisition Act - compulsory acquisition of land - As per assessee it is capital receipt and not chargeable to tax - whether interest which was received under section 28 of LAC Act is to be treated as part of compensation or not? - HELD THAT:- Hon'ble Supreme Court in CIT Vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] and in other cases had held that interest awarded under section 28 of LAC Act was in the nature of solatium and was an integral part of compensation. Also further held that interest received under section 34 of LAC Act was on account of delayed payment of compensation and was revenue receipt. Though the amounts received under sections 28 and 34 of LAC Act are termed as interest but two stands at different pedestal in so far as the Income Tax Act is concerned.
Such is the proposition laid down by Pune Bench of Tribunal in Shri Madhav Pandharinath Kande Vs. ITO [2019 (7) TMI 1928 - ITAT PUNE]. The Hon’ble Apex Court in CIT Vs. Chet Ram (HUF) [2017 (9) TMI 1532 - SUPREME COURT] talks of the year of taxability which is not in dispute. In the totality of the same, we allow the plea of assessee that interest received under section 28 of LAC Act is to be treated as part of compensation and is not to be charged as income from other sources in the hands of assessee. Thus, modified grounds of appeal raised by assessee are allowed.
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2019 (9) TMI 1688
Nature of receipts - interest subsidy receipt by the assessee from the government - capital receipt or revenue receipt - HELD THAT:- The question proposed is covered by our decision Principal Commissioner of Income Tax, Central-2, Kolkata versus Ankit Metal & Power Ltd.[2019 (7) TMI 878 - CALCUTTA HIGH COURT].
Whether petition is a question of fact and not admissible under Section 260A of the Income Tax Act? - As the respondent is represented by learned Counsel, issuance and service of notice of appeal are dispensed with.
Let informal paper books be filed by the appellant’s advocate-on-record by 15th November, 2019, serving a copy thereof on the advocate-on-record for the respondent at least seven days before the date of hearing of this appeal.
On the prayer of Mr. J.P. Khaitan, learned senior counsel appearing for the respondent, leave is granted to file their cross objection in the said appeal by 30th September, 2019. List this appeal on 27th November, 2019.
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2019 (9) TMI 1687
Area based exemption - respondents are eligible for the benefit of Notification No. 39/2001-C.E - it was held by CESTAT that equipments were only to improve efficiency, to ease the problem of storage and handling of raw materials. Revenue could not produce any document or any evidence which shows enhancement of production capacity. No infirmity with the learned Commissioner (Appeals) order.
HELD THAT:- No case is made out to interfere with the impugned order passed by the Tribunal.
The Civil appeals are accordingly dismissed.
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