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2020 (11) TMI 1116 - SC ORDER
Effect of section 92BA as omitted by Finance Act, 2017 w.e.f. 01.04.2017 - effect of repeal of a statute vis-a-vis deletion/addition of a provision in an enactment and its effect thereof - TP Adjustment - AO made a reference to TPO u/s 92CA to determine arms length price as the assessee had entered into specified domestic transaction and on the ground it was covered u/s 92BA - as decided by HC [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of section 92BI and reference made to the order of TPO under section 92CA could be invalid and bad in law.
HELD THAT:- Delay condoned. Issue notice.
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2020 (11) TMI 1115 - SUPREME COURT
Directory provision or not - Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 mandating the District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing - HELD THAT:- The question as to whether, a time limit fixed for a public officer to perform a public duty is directory or mandatory has been examined earlier by the Courts as well. A question arose before the Privy Council in respect of irregularities in the preliminary proceedings for constituting a jury panel. The Municipality was expected to revise the list of qualified persons but the jury was drawn from the old list as the Sheriff neglected to revise the same. It was in these circumstances, the decision of the jury drawn from the old list became the subject matter of consideration by the Privy Council. It was thus held that it would cause greater public inconvenience if it were held that neglecting to observe the provisions of the statute made the verdicts of all juries taken from the list ipso facto null and void so that no jury trials could be held until a duly revised list had been prepared.
In T.V. Usman v. Food Inspector, Tellicherry Municipality, Tellicherry [1994 (1) TMI 292 - SUPREME COURT], the time period during which report of the analysis of a sample Under Rule 7(3) of the Prevention of Food Adulteration Rules, 1955 was to be given, was held to be directory as there was no time-limit prescribed within which the prosecution had to be instituted. When there was no such limit prescribed then there was no valid reason for holding the period of 45 days as mandatory. Of course, that does not mean that the Public Analyst can ignore the time-limit prescribed under the rules. He must in all cases try to comply with the time-limit. But if there is some delay, in a given case, there is no reason to hold that the very report is void and, on that basis, to hold that even prosecution cannot be launched.
This Court distinguished between failure of an individual to act in a given time frame and the time frame provided to a public authority, for the purposes of determining whether a provision was mandatory or directory, when this Court held that it is a well-settled principle that if an act is required to be performed by a private person within a specified time, the same would ordinarily be mandatory but when a public functionary is required to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified.
Even though, this Court in United Bank of India v. Satyawati Tondon and Ors. [2010 (7) TMI 829 - SUPREME COURT] held that in cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which will ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters.
The Hon'ble High Courts are well aware of the limitations in exercising their jurisdiction when affective alternative remedies are available, but a word of caution would be still necessary for the High Courts that interim orders should generally not be passed without hearing the secured creditor as interim orders defeat the very purpose of expeditious recovery of public money.
There are no error in the order passed by the High Court - the appeal is dismissed.
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2020 (11) TMI 1114 - DELHI HIGH COURT
Grant of Default bail - bail sought on the ground that investigating agency has failed to file a police report under Section 173(2) of the Cr.P.C. within the stipulated period of one-hundred and eighty days - recovery of narcotic drugs and/or psychotropic substance - police report under Section 173(2) of the Cr.P.C. can be considered as such if it is not accompanied by a Chemical Examiner's Report with regard to the substance recovered or not - entitlement for default bail when application for such bail has been filed prior to the submission of the report under Section 173(2) of the Cr.P.C. but is taken up for consideration simultaneously with the said report being filed.
Whether in a case of commission of an offence punishable under the provisions of the NDPS Act, which is founded on recovery of narcotic drugs and/or psychotropic substance, a police report under Section 173(2) of the Cr.P.C. can be considered as such if it is not accompanied by a Chemical Examiner's Report with regard to the substance recovered? - HELD THAT:- In Mehal Singh [1978 (4) TMI 240 - PUNJAB AND HARYANA HIGH COURT], the full Bench of the Punjab and Haryana High Court examined the question whether the investigation of an offence could be considered complete in terms of Section 173(2) of the Cr.P.C., even though the police officer investigating the case had not received the reports of experts such as the chemical examiner, the serologist, the ballistic expert or the finger print expert, which are admissible in law under Section 293 of the Cr.P.C. And, whether such a chargesheet would qualify to be termed as a police report in terms of Section 190(1)(b) of the Cr.P.C. to enable a Magistrate to take cognizance of the offence disclosed therein. The Court referred to the decision of the Supreme Court in Noor Khan v. State of Rajasthan: AIR 1964 SC 286 and observed that it was deducible from the said decision that it is not incumbent upon the investigating officer to reduce in writing the statements of witnesses. The Court held that he may merely include their names in the list of witnesses in support of the prosecution's case when submitting the chargesheet - The Court further reasoned that the contention that a chargesheet would be incomplete if not accompanied by the report of experts such as chemical analyst, serologist, ballistic expert, fingerprint expert etc. stands on a weaker ground.
The petitioners' contention that the report submitted on 27.05.2019 could not be construed as a report under Section 173(2) of the Cr.P.C. must be rejected. The first question is, thus, answered in the negative.
Whether an accused would be entitled to bail in default under Section 167(2) of the Cr.P.C. where his application for such bail has been filed prior to the submission of the report under Section 173(2) of the Cr.P.C. but is taken up for consideration simultaneously with the said report being filed? - HELD THAT:- As per Section 167 of the Cr.P.C., after the period of sixty days or ninety days as the case may be expires, the Magistrate would have no power to remand him to custody and he is required to be released on bail, if he is prepared to and furnishes the bail. It is also expressly provided that every person released on bail under the said sub-section would be deemed to be released under the provisions of Chapter XXXIII of the Cr.P.C. for the purposes of that Chapter. Once the maximum period for completing the investigation as specified under Section 167(2) of the Cr.P.C. is expired and once the accused indicates that he is prepared to furnish bail and does so, he is bound to be released.
In Hitendra Vishnu Thakur and Ors. v. State of Maharashtra and Ors. [1994 (7) TMI 343 - SUPREME COURT], the Supreme Court held that although the accused would be entitled to bail in default, in case the investigation is not complete in terms of Section 167(2) of the Cr.P.C. read with Section 20(4) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 (TADA) provided such bail cannot be granted by the court on its own motion without any application being made by the accused person of his offering to furnish bail. The Court also clarified that at that stage, that it would only consider whether the challan has been filed within the maximum period as prescribed or whether the said period has been extended under Clause (bb) of Sub-section (4) of Section 20 of the TADA. The court would not be concerned with any other consideration such as the gravity of the case, seriousness of the offence or character of the offender.
The impugned order, which is premised on the basis that the court would have to consider the question of default bail at the point when the application is taken up for consideration is unsustainable - As explained by the Supreme Court in Nirala Yadav [2014 (6) TMI 1018 - SUPREME COURT], "the accused can avail his liberty only by filing an application stating that the statutory period for filing of the challan has expired, the same has not yet been filed, and an indefeasible right has accrued in his favour and further he is prepared to furnish the bail bond. Once such an application is filed, it is obligatory on the part of the court to verify from the records as well as the public prosecutor whether the time has expired and the charge-sheet is filed or not".
The moment the accused makes such an application, the court is required to only examine whether the conditions as prescribed under Section 167(2) of the Cr.P.C. have been met when the application is made. If they are, then the power of the court to remand is lost and the accused has to be granted bail. In this view, this Court is unable to concur with the reasoning of the Special Court in the impugned order - The implicit assumption that the relevant point of time for considering whether the accused have availed of their indefeasible right would be the point at which the applications are considered and not when it is filed, as stated earlier, not sustainable.
The impugned order is set aside. However, the applications moved by the petitioners before the said court seeking bail in default under the provisions of Section 167(2) of the Cr.P.C. are dismissed.
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2020 (11) TMI 1113 - ITAT MUMBAI
Denial of natural justice - Validity of CIT(A) order - as argued CIT(A) has decided the matter of controversy in absence of the assessee and without giving an opportunity of being heard to the assessee in accordance with law - HELD THAT:- On appraisal of the order of the CIT(A) dated 12.02.2019 passed by the CIT(A) we find that the CIT(A) has decided the matter of controversy in absence of the assessee/Representative of the assessee without giving an opportunity of being heard to the assessee in the accordance with law. A proper and reasonable opportunity is required to be given to the assessee before the deciding the matter of controversy in accordance with law.
Accordingly in the interest of justice, we remit the issue raised in the appeal to the file of the Ld. CIT(A). Ld. CIT(A) is directed to consider the issue afresh and pass an order on the merits of the case after giving after giving an proper opportunity of being heard to the assessee in accordance with law. Therefore, in the said circumstances, we are of the view that the order of the CIT(A) is not liable to be sustainable in the eyes of law.
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2020 (11) TMI 1112 - MADRAS HIGH COURT
Application for compounding u/s 279(2) - application made was refused as it had been made after the order of conviction has been passed by the Criminal Court - HELD THAT:- Guideline 4.4(f) of the Circular in F. No. 285/90/2008-IT(Inv.)/12 dated 16.05.2008 issued by the CBDT directing that compounding should not be permitted when conviction order has been passed by the Criminal Court, has to be construed that it would not stand in the way for considering a compounding application when appeal against conviction by the Criminal Court is pending, as in this case. Though the Respondent has made a distinction for granting the benefit of compounding to others while denying the same to the Petitioner for the reason that their compounding applications have been made before conviction by the Criminal Court, such distinction cannot be of any avail in view of the binding decisions of the Division Benches of this Court. See UMAYAL RAMANATHAN [2009 (4) TMI 36 - MADRAS HIGH COURT]
Conduct of the Petitioner by non-cooperation at the initial stage disentitles him to any relief - It would have to be examined with reference to the well known canons of the principles of natural justice that no material could be relied against a person without affording him an opportunity to explain his position before taking any decision entailing adverse civil consequence to him. In the fact situation that has arisen in this case, it was incumbent upon the Respondent to have informed the Petitioner before passing the impugned order that it was proposed to deny relief on account of such non-cooperation at the initial stage of the proceedings by bringing the same to his notice and supplying copies of the materials relied in support of the same, and calling upon him to submit explanation and also afford an opportunity of personal hearing, in that regard. The explanation of the Petitioner, if submitted, ought to be then considered before taking the final decision in the matter. Such exercise apparently has not taken place in the instant case as seen in the impugned order.
The result of the foregoing discussion is that the impugned Order passed by the Respondent cannot be sustained and it is set aside and the matter is remitted to the Respondent for fresh determination of the matter. It is incumbent upon the Respondent to take into account the aforesaid conclusions arrived by this Court, conduct enquiry affording opportunity of personal hearing to the Petitioner following the prescribed procedure in consonance with the principles of natural justice, deal with each of the contentions raised by the Petitioner and pass reasoned orders on merits.
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2020 (11) TMI 1111 - SECURITIES APPELLATE TRIBUNAL, MUMBAI
Fraudulent And Unfair Trade Practices Relating To Securities Market - imposition of disgorgement - taking positions as a hedge in the derivative markets by someone who has an underlying exposure - F&O Market amounts to the commission of a ‘fraudulent and manipulative trade’ in securities in terms of the SEBI (PFUTP) Regulations - Offloading 5% of the shares in RPL by its promoter RIL would cause a flutter in the stock market and would not be in the interest of the investors - short positions taken - differences of views within the three-member Bench.
Appellants are prohibited from dealing in equity derivatives in F&O segment of Stock Exchanges, directly or indirectly, for a period of one year from the date of the order and shall disgorge an amount alongwith interest @12% p.a. w.e.f. 29.11.2017 onwards till the date of payment
Whether the Principal-Agent model/‚agency model‛ adopted by appellant no. 1 RIL and implemented with the help of other 11 appellants (because of merger of 2 of the original 12 other Noticees, there are 11 other appellants) in cornering huge position limits in the 2007 November single stock futures contract in the shares of Reliance Petroleum Ltd. (‘RPL’ for short) and the offloading of substantial quantities of RPL shares in the cash segment of the stock exchanges in the last 10 minutes (effectively 8.40 minutes) of the trading hours on 29 November, 2007, the settlement day, allegedly with an intention to artificially depress the price in the cash segment to make larger gains in the future contracts, are violative
HELD THAT:- As cornering about 62% / 93% of the market-wide position limit by one entity through a manipulative scheme or device is not the same thing as exceeding the position limit by a client in a transparent manner, visible to the exchange/clearing corporation/house. Therefore, the finding in the impugned order that it is a rare case of violation of section 12A of the SEBI Act and Regulation 3 and 4 of the PFUTP Regulations is perfectly in order. Further, it is an established fact that SEBI administers the SCRA, 1956, SEBI Act, 1992, Depositories Act, 1996 and the delegated provisions of the Companies Act, 1956/2013. Therefore, if the nature of the violations specified in any legislations spills over to the mandate under another legislation, SEBI is fully within its rights to invoke the provisions of both/all those legislations. In the instant matter, therefore, when it was held that the position limit violation had been achieved through a dubious, manipulative scheme or a device, such an act would squarely fall within the provisions of SEBI Act and PFUTP Regulations. We, therefore, find no error or mistake on the part of the WTM in invoking the relevant provisions of SCRA, SEBI Act and the PFUTP Regulations, 2003 and in passing the Order under section 11 and 11B of SEBI Act accordingly.
Disgorgement is an amount equivalent to the wrongful gain made or loss averted and therefore it is an equitable remedy; not a penal action. Moreover, equity is further served when the disgorged amount is credited to the Investor Protection Fund of SEBI, for the benefit of the market participants, particularly small investors; not to the Consolidated Fund of India as in the case of fine/penalty. Therefore, both the contentions that disgorgement is a penalty and SEBI does not have the power to impose disgorgement under section 11B of SEBI Act are contrary to the expressly stated provisions of the SEBI Act and therefore have no merit and are rejected forthwith.
Further, fact that disgorgement of Rs. 447.27 crore (+interest) imposed on the appellant no. 1 is a sizable sum does not make that direction harsh both because (1) it is only a remedial action and (2) what is disgorged is only what has been gorged by contravention of the specified laws. Nothing has been taken out of the appellant’s own funds/assets in the process. Since it is only an equitable remedy there is no question of that being harsh or a penal action.
Given the aforesaid reasons, appeal lacks any merit and is hereby dismissed. No orders on costs. Appellant no. 1 is directed to make payment of the disgorged amount of Rs. 447.27 Crore along with simple interest calculated at the rate of 12% p.a. with effect from November 29, 2007 till the actual date of payment to SEBI within 60 days from the date of this Order.
In view of the majority opinion, the appeal is dismissed with no order as to costs. Appellant no. 1 is directed to make payment of the disgorged amount of Rs. 447.27 Crore along with simple interest calculated at the rate of 12% p.a. with effect from November 29, 2007 till the actual date of payment to SEBI within 60 days from the date of this Order.
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2020 (11) TMI 1110 - ITAT VISAKHAPATNAM
Revision u/s 263 - taxability of additional income in tobacco stock as declared in search u/s 132 - two possible views on the issue - PCIT noticed that the AO taxed the undisclosed income representing unexplained stock @30% instead of 60% as required u/s 115BBE - Whether additional income admitted by the assessee should not be treated as undisclosed investment u/s 69? - HELD THAT:- There are two possible views with regard to excess stock found during the course of search/survey in the premises of the assessee. According to the decisions relied upon by the assessee, the same forms part of business income and the same cannot be assessed u/s 69 - There are two possible views on assessment of business stock as business income as well as unexplained investment as per the views of Pr.CIT and the assessee.
AO after examining the explanation taken a view that the excess stock required to be assessed as business income, accordingly completed the assessment. When there are two possible views and one of the possible view is taken by the AO, the CIT is not permitted to substitute his view to tax the assessee at higher rate by applying the provisions of section 115BBE of the Act in the proceedings u/s 263.
As decided in Spectra Shares and Scrips (P) Limited [2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263.
Once the Assessing Officer had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries - See G.V.R. Associates. v. Income-tax Officer, Ward-1(3), Vijayawada.
Thus we hold that there is no case for revision u/s 263 made - Decided in favour of assessee.
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2020 (11) TMI 1109 - SUPREME COURT
Validity of charge-sheet as well as the summoning order - person belonging to Scheduled Caste - dispute regarding possession of property - HELD THAT:- There is a dispute about the possession of the land which is the subject matter of civil dispute between the parties as per Respondent No. 2 herself. Due to dispute, Appellant and others were not permitting Respondent No. 2 to cultivate the land for the last six months. Since the matter is regarding possession of property pending before the Civil Court, any dispute arising on account of possession of the said property would not disclose an offence under the Act unless the victim is abused, intimated or harassed only for the reason that she belongs to Scheduled Caste or Scheduled Tribe.
In judgment reported as KHUMAN SINGH VERSUS STATE OF MADHYA PRADESH [2019 (8) TMI 1880 - SUPREME COURT], this Court held that in a case for applicability of Section 3(2)(v) of the Act, the fact that the deceased belonged to Scheduled Caste would not be enough to inflict enhanced punishment. This Court held that there was nothing to suggest that the offence was committed by the Appellant only because the deceased belonged to Scheduled Caste.
Therefore, offence under the Act is not established merely on the fact that the informant is a member of Scheduled Caste unless there is an intention to humiliate a member of Scheduled Caste or Scheduled Tribe for the reason that the victim belongs to such caste. In the present case, the parties are litigating over possession of the land. The allegation of hurling of abuses is against a person who claims title over the property. If such person happens to be a Scheduled Caste, the offence Under Section 3(1)(r) of the Act is not made out.
The Appellant had sought quashing of the charge-sheet on the ground that the allegation does not make out an offence under the Act against the Appellant merely because Respondent No. 2 was a Scheduled Caste since the property dispute was not on account of the fact that Respondent No. 2 was a Scheduled Caste. The property disputes between a vulnerable Section of the society and a person of upper caste will not disclose any offence under the Act unless, the allegations are on account of the victim being a Scheduled Caste. Still further, the finding that the Appellant was aware of the caste of the informant is wholly inconsequential as the knowledge does not bar, any person to protect his rights by way of a procedure established by law.
The charges against the Appellant Under Section 3(1)(r) of the Act are not made out - the charge-sheet to that extent is quashed - Appeal disposed off.
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2020 (11) TMI 1108 - SC ORDER
Condonation of delay of 51 days in filing appeal - sufficient cause for delay provided or not - HELD THAT:- Section 62 of the Insolvency and Bankruptcy Code 2016 provides a period of forty five days from the date of the receipt of an order of the National Company Law Appellate Tribunal for filing an appeal before this Court. Under sub-section (2), this Court is empowered to condone a delay of a further period not exceeding fifteen days for sufficient cause.
The appeal is barred by limitation since the delay of 51 days is beyond the period of delay which can be condoned under sub-section (2) of Section 62 - the appeal is dismissed on the ground that it is barred by limitation.
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2020 (11) TMI 1107 - MADRAS HIGH COURT
Transfer of Member-Judicial in Income Tax Appellate Tribunal from Chennai Bench to Jabalpur - Interim order declining the grant of interim stay of operation of the order of transfer - HELD THAT:- A perusal of the impugned order would disclose that the Tribunal has exercised its discretion in a fair and proper manner. The materials placed before this Court would prima facie disclose that the petitioner had served in and around Chennai for quite numbers of years and insofar as his present posting is concerned, he was posted at Chennai on 26.03.2015, and before the impugned order, he has served in the place for five years.
Though the learned counsel appearing for the petitioner made an attempt to canvass the merits of his case which is pending before the Tribunal, this Court is not inclined to it for the reason that any finding/observation given in this writ petition may affect his case pending before the Central Administrative Tribunal. In the light of the well settled legal position as enunciated in various pronouncements of the Hon'ble Supreme Court and that apart, the Tribunal has also exercised its discretion in a fair and proper manner in declining to grant interim stay of operation of the order of transfer, this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, cannot interfere with the same.
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2020 (11) TMI 1106 - ALLAHABAD HIGH COURT
Rejection of claim of the petitioner under the Mukhyamantri Kisan Avam Sarvahit Bima on the ground that the claim is time barred - delay in providing the death certificate - HELD THAT:- The State Government intending to extend insurance cover to the marginalised farmers in the State floated e-tenders calling upon the Insurance Companies to participate and bid for the implementation of the 'Samajwadi Kisan and Sarvahit Bima Yojna' in Uttar Pradesh which was subsequently renamed as 'Mukhayamantri Kisan and Sarvahit Bima Yojna' in Uttar Pradesh vide Government Order No. 511b(1)/ka-Ni-6-2017-208(4)/2015 dated 20.6.2017. In terms of the said tender, various insurance companies participated and with the highest bidder an Agreement was entered into in between the Insurance Companies and the State of Uttar Pradesh through the Governor.
Whether the prescription of limitation in the Scheme is 'unreasonable' and 'arbitrary' and upto what extent this Court can interfere with the Scheme especially with regard to limitation? - HELD THAT:- The Scheme was formulated by the State as a Welfare State and the insurance premium is paid by the State to the Insurance Company, who in turn issue the policies. Thus, it is clearly an insurance contract wherein the policy is issued by the Insurance Company and the premium is paid by the State in discharging its obligation as a welfare State. The Scheme is clearly a 'socio-beneficial scheme' for the benefit of marginalised sections of the society.
Insurance by its very nature is a contingent contract and the benefits of the insurance policy depend on the contingencies as indicated in the policy. Insurance in India is governed under the provisions of the Insurance Act, 1938 which authorizes and regulates the business of insurance in India. Essentially, the breach of terms of insurance policy is a 'tortuous liability' and but for any specific statutory enactment, (like M.V. Act, Employees Compensation Act, etc) gives a cause of action for filing a suit, in the event of breach of condition of policy - The Schedule appended to the 'Limitation Act' governs the period of limitation for filing a suit on account of breach of an insurance policy and Article 44(a) of the said Schedule provides for a period of three years' limitation for filing a suit from the date of the death of the deceased, or from the date when the claim is partly or wholly denied. It is well-settled that the provisions of the Limitation Act are applicable to the suits, appeals and the applications as enumerated and before the Courts only.
The prescription of limitation in Scheme of the nature which is under consideration by this Court has to be interpreted in a manner so as to achieve the object for which the Scheme is made and any prescription or provision/s which is/are for contrary to the statutory provisions has to be repelled more so in view of specific mandate of Section 46 of the Insurance Act as well as the specific Agreement in between the Insurance Companies and the State agreeing to the applicability of the laws as prevalent in India.
It is no doubt true that the Limitation Act is not applicable in proceedings other than the suits and appeals and the proceedings before the Court, however, the Schedule attached to the Limitation Act clearly lays down the period within which a suit can be instituted in the event of non-payment of compensation.
Thus, the limitation prescribed under the Scheme is wholly unreasonable and arbitrary and is liable to be struck out as it is well-settled that even while testing the validity of an administrative action, the same can be tested on the touch stone of the Article 14 of the Constitution of India. A "socio-beneficial' Scheme has to be interpreted in a manner so as to advance the purpose for which the Scheme is formulated and not in a manner so as to defeat the entire purpose of the Scheme - the order dated Nil March, 2020 (Annexure-9) is set aside, whereby the claim of the petitioner has been rejected on the ground of limitation on both grounds as raised and discussed in this Judgment.
The limitation provided under the said Scheme is unreasonable and arbitrary and have substituted the said period by a period of three years, as recorded above, we direct the Registrar General of this Court to transmit a copy of this order to The Chief Secretary State of Uttar Pradesh and Director Institutional Finance, State of Uttar Pradesh, for its communication to all the District Magistrates in the State and the District Magistrates in turn are directed to entertain and process the claims filed under the Scheme within limitation as prescribed above by this Court treating them to be within limitation and the same should be processed on their merits - It is directed and provided for the limitation of three years, till the time the State Government takes an appropriate decision and amends limitation clauses of the Scheme to make them more reasonable taking into account the socio economic condition of the society as well the laws of India.
Petition allowed.
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2020 (11) TMI 1105 - SUPREME COURT
Territorial jurisdiction to entertain the writ petition - part of cause of action for filing the Writ Petition No. 5999 of 2014 arose within the territorial jurisdiction of Patna High Court or not - Petitioner served in the State of West Bengal under the authorities and organizations which are located either in States of West Bengal or Jharkhand - recovery of pension contribution - HELD THAT:- The part of cause of action has arisen within the territorial jurisdiction of Patna High Court. The deceased Petitioner was continuously receiving pension for the last 08 years in his saving bank account in State Bank of India, Darbhanga. The stoppage of pension of late B.N. Mishra affected him at his native place, he being deprived of the benefit of pension which he was receiving from his employer. The employer requires a retiring employee to indicate the place where he shall receive pension after his retirement. Late Shri B.N. Mishra had opted for receiving his pension in State Bank of India, Darbhanga, State of Bihar, which was his native place, from where he was drawing his pension regularly for the last 08 years, stoppage of pension gave a cause of action, which arose at the place where the Petitioner was continuously receiving the pension.
The view of the learned Single Judge as well as the Division Bench holding the writ petition not maintainable on the ground of lack of territorial jurisdiction was completely erroneous and has caused immense hardship to the Petitioner.
The Appellant is entitled for an interim order in the writ petition for her sustenance. The Appellant's husband, who had filed the writ petition had died during the pendency of the writ petition. After his death, the Appellant, the widow was substituted. Six years have passed after filing of the writ petition wherein stoppage of pension was questioned. Appellant being the widow is also entitled for pensionary benefit for her sustenance since her husband was receiving pension - during the pendency of the writ petition the Appellant is entitled to be paid provisional pension which shall be subject to final decision in the writ petition - appeal allowed.
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2020 (11) TMI 1104 - DELHI HIGH COURT
Seeking reverse/transfer back the amount wrongly transferred/credited - Amount credited in the account of respondent No.4 maintained with respondent No.2 bank to the current account of the petitioner maintained with respondent No.3 bank - petitioner has broadly stressed that this is a bona fide mistake - HELD THAT:- The facts show that the averments of the petitioner lack complete bona fide. Other than a bald averment claiming that the said amount has been sent by an error there is nothing on record to show any error committed by the petitioner. In fact a plea was strongly raised that the money was to be transferred to a company Paras Milk and Food Corporation.
There is no material placed on record to show any such intention or liability on the part of the petitioner to transfer funds to Paras Milk and Food Corporation. As manifest that this is a bald plea being made by the petitioner that by oversight and mistake, the said sum was inadvertently transferred to the account of respondent No.4 cannot be accepted.
The contentions of respondent No.1 that respondent No.4 is merely an entry provider, as is apparent from the facts stated in the counter affidavit throw further doubt on the averment being made by the petitioner.
It is also clear that there are highly disputed questions of facts which have been raised by the petitioner. There is no merit in the present petition.
Given the fact that there are disputed questions of fact, liberty is granted to the petitioner to take steps, as per law, for recovery of the alleged claims before an appropriate forum/appropriate Civil Court.
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2020 (11) TMI 1103 - SUPREME COURT
Criminal Conspiracy - Jurisdiction of investigation conducted - non-compliance of Section 6 of DSPE Act - cases are overwhelmingly and predominantingly of civil nature as purely bases on breach of contract (FSA) and the criminal prosecutions or not - CBI followed the doctrine of parity in filing the criminal prosecutions against the Petitioners - absence of Officers/official of NCL - charge of Criminal conspiracy Under Section 120-B Indian Penal Code could be made out or not.
HELD THAT:- Though Section 5 enables the Central Government to extend the powers and jurisdiction of Members of the DSPE beyond the Union Territories to a State, the same is not permissible unless, a State grants its consent for such an extension within the area of State concerned Under Section 6 of the DSPE Act. Obviously, the provisions are in tune with the federal character of the Constitution, which has been held to be one of the basic structures of the Constitution.
It could thus be seen, that the State of Uttar Pradesh has accorded a general consent for extension of powers and jurisdiction of the Members of DSPE, in the whole of State of Uttar Pradesh for investigation of offences under the Prevention of Corruption Act, 1988 and attempts, abetments and conspiracies in relation to all or any of the offence or offences committed in the course of the transaction and arising out of the same facts. The same is however with a rider, that no such investigation shall be taken up in cases relating to the public servants, under the control of the State Government, except with prior permission of the State Government - As such, for registration of FIR against the private individuals for the offences punishable under the Prevention of Corruption Act and other offences under the Indian Penal Code, committed in the course of the same transaction or arising out of the same facts, the Members of DSPE have all the powers and jurisdiction. As such, we find absolutely no merits in the appeals filed by the private individuals.
Insofar as the two public servants who have been undoubtedly working under the State Government are concerned, initially, they were not named in the FIR. However, their names surfaced during the course of investigation and thus sanction was granted for their prosecution Under Section 19 of the Prevention of Corruption Act vide order dated 31st May 2012, prior to filing of the charge-sheet. It is also not in dispute that Post-Facto consent was given by the State Government vide notification dated 7th September 2018, Under Section 6 of the DSPE Act to the authorities to investigate the public servants.
As early as in 1955, the question arose for consideration before this Court, as to whether an investigation carried out by a police officer below the rank of Deputy Superintendent of Police, Under Section 5(4) of the Prevention of Corruption Act, 1947, without the order of the Magistrate of First Class, was mandatory or directory? While holding that the provision is mandatory, this Court considered a question as to whether and to what extent, the trial which follows such investigation, is vitiated. The Court, in H.N. Rishbud and Inder Singh v. The State of Delhi [1954 (12) TMI 20 - SUPREME COURT] held that the cognizance and the trial cannot be set aside unless the illegality in the investigation can be shown to have brought about miscarriage of justice. It has been held, that the illegality may have a bearing on the question of prejudice or miscarriage of justice but the invalidity of the investigation has no relation to the competence of the court.
Recently, a bench of this Court consisting one of us (Khanwilkar J.) had an occasion to consider the aforesaid provisions of DSPE Act, in Kanwal Tanuj v. State of Bihar and Ors [2020 (4) TMI 910 - SUPREME COURT]. In the said case, the question arose, as to whether when an offence was committed in the Union Territory and one of the Accused was residing/employed in some other State outside the said Union Territory, the Members of DSPE had power to investigate the same, unless there was a specific consent given by the concerned State Under Section 6 of the DSPE Act - While considering the argument on behalf of the State, that such a consent was necessary for CBI to proceed with the investigation, this Court held that the Respondent-State having granted general consent in terms of Section 6 of the DSPE Act vide notification dated 19.02.1996, it was not open to the State to argue to the contrary.
In the present case, there are no pleadings by the public servants with regard to the prejudice caused to them on account of non-obtaining of prior consent Under Section 6 of the DSPE Act qua them specifically in addition to the general consent in force, nor with regard to miscarriage of justice.
There are no reason to interfere with the finding of the High Court with regard to not obtaining prior consent of the State Government Under Section 6 of the DSPE Act - matter remitted to the learned Single Judge for deciding the questions on its own merits - appeal disposed off.
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2020 (11) TMI 1102 - ITAT DELHI
TP Adjustment - allocation of expenses - assessee submitted he had determined the percentage of profit by allocating expenses incurred on the basis of gross margin earned by AEs other than Sumitomo Corporation Japan, and by non-AEs whereas the TPO had allocated after assuming 26% of the gross profit earned by non-AEs and, thereafter had allocated expenses in proportion of gross profit - TPO, in the instant case proposed an adjustment on protective basis in respect of indent segment of AEs other than Sumitomo Corporation, Japan by considering 5% as the arm’s length commission rate for commission received - DRP while holding that no protective adjustment is required and the addition has to be made on substantive basis, directed the TPO to apply 3.03% as CUP for adjustment.
HELD THAT:- Respectfully following the consistent decision of the Tribunal in assessee’s own case for AYs 2007-08-2011-12 [2018 (10) TMI 1785 - ITAT DELHI] for AYs 2013-14 [2019 (5) TMI 1440 - ITAT DELHI] we restore the issue to the file of the AO/TPO with a direction to examine and benchmark the international transaction by adopting TNMM as the most appropriate method by taking ‘berry ratio’ as PLI. The assessee has to substantiate its margin by bringing comparable uncontrolled transactions to demonstrate that its commission earned in this segment is at arm’s length. Needless to say, the AO/TPO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2020 (11) TMI 1101 - ITAT DELHI
Income deemed to accrue or arise in India - Fixed place PE in India - profits attributable to the PE in India - Royalty receipt - HELD THAT:- Tribunal in assessee’s own case for Assessment Years 2006-07 and 2008-09 [2013 (11) TMI 564 - ITAT DELHI] has reached the conclusion that there was a fixed place PE of the assessee in India and that profit attribution had to be made in the hands of the assessee due to such fixed place PE. Although, the assessee has approached the Hon’ble High Court against the said order of the Tribunal holding that the assessee had fixed place PE in India, the appeals are yet to be disposed of by the Hon’ble High Court. Thus, as of date, the order of the Co-ordinate Bench of the Tribunal for Assessment Years 2006-07 and 2008-09 have a binding precedential value for us because bound by judicial discipline, we are to follow the decisions of the Co-ordinate Bench, especially if the same have been rendered in assessee’s own case.
Thus we uphold the action of the Ld. CIT(A) in holding that the assessees has a fixed place PE in India.
Methodology of profit attribution - As in assessee’s own case for Assessment Years 2006-07 and 2008-09 has laid down the methodology and respectfully following the same, the TPO is directed to adopt the same methodology as enumerated by the Co-ordinate Bench. Thus, the issue to attribution of profits is restored to the file of TPO for computing the attribution of profits with respect to the fixed place PE after giving due opportunities to the assessee to submit its computation and calculations.
Assessee did not have a dependent Agent PE or a service PE in India and reduction in profit attribution done by the AO - CIT (A) has returned a finding based on the order of the ITAT and has also noted that even in assessment year 2006-07 [2018 (2) TMI 1742 - ITAT NEW DELHI] the Ld. CIT (A) had held that there was no service PE in India and that the AO had not challenged this before the ITAT.
Payment link charges/IPLC charges being taxable under royalty has been decided in assessee’s favour by the Tribunal in assessment year 2006-07 [2018 (2) TMI 1742 - ITAT NEW DELHI] - It is also seen that the Ld. CIT (A) has taken due cognizance of this finding of the Tribunal in the year under consideration and has allowed relief to the assessee.2 Therefore, in absence of any contrary facts having been pointed out by the department, in view of the order of the coordinate bench in assessee’s own case as aforementioned, we dismiss the related grounds raised by the department in this regard.
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2020 (11) TMI 1100 - MADRAS HIGH COURT
Correctness to effect subsequent transfers in respect of the same property, where agreement for sale is registered in respect of immovable property - whether the transfer is restricted to one time in respect of the immovable property, unless the previous transfer or any agreement is set aside in the court of law, and other transfer is permissible? - HELD THAT:- The contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest or charge on such property. The agreement of sale is merely a document creating right to obtain a document of sale on fulfillment of terms and conditions specified therein and it is only capable of enforcement in the event of breach of contract by the other side. Even to enforce such agreement for specific performance, the agreement holder has to establish not only the contract but other grounds viz., ready and willingness on his part to get a decree of specific performance provided the suit is filed within time.
In Narandas Karsondas vs. S.K. Kamtam & another [[1976 (12) TMI 186 - SUPREME COURT]] the Honourable Supreme Court also considered the nature of the right created on the immoveable property by a contract for sale. It has been stated that contract of sale in view of section 24 of T.P. Act does not of itself create any interest in or charge on the property. The personal obligation created by a contract of sale (as recognised in Section 3 of the Specific Relief Act and section 91 of the Trust Act is described in Section 40 of the T.P. Act) as an obligation arising out of contract. An annexure to the ownership of the property, but not amounting to interest or easement therein.
Section 19(b) of Specific Relief Act also protects the subsequent transferee for value and for consideration in good faith without notice of the original contract. Even if a person has no title to the property has entered into a contract for sale, the transferee can seek for specific performance under section 13 of the Specific Relief Act.
There is no bar for creating subsequent transfer of the immovable property. Effect of the subsequent transfer is always subject to the earlier transfer created by the transferor of the immovable property. Therefore, it cannot be said that since the agreement for sale is registered the owner viz., the Vendor has no right to 'execute any document.
In MRS. VENKATAMMA VERSUS THE SUB-REGISTRAR, HOSUR, KRISHNAGIRI DISTRICT. MR. M. CHANDRAPPA [2019 (12) TMI 1640 - MADRAS HIGH COURT] in fact settlement deed has been presented for registration by the Vendor after three years of the so called contract. Merely on the basis of the agreement for sale, the registrar refused to register the document which is against the very substantive law of the country. If such approach is accepted a situation may arise in every loan transaction if some contract is registered, merely because it shown in the encumbrance as a registered agreement, the owners of the property would be prohibited from dealing with the property as long as the encumbrance finds place in the encumbrance certificate Such situation in fact would lead to deprive the right of the owner of the property to deal with the property which is a constitutional right.
The view taken by the learned single judge in Venkattamma vs. The Sub-Registrar and another, does not lay down correct position of law and the same is hereby overruled. Another single Judge in N. RAJU VERSUS THE DISTRICT REGISTRAR, DISTRICT REGISTRAR'S OFFICE, THE SUB-REGISTRA, SUB-REGISTRAR'S OFFICE, THIRUVERUMBUR, [2019 (3) TMI 2021 - MADRAS HIGH COURT] had directed to register the subsequent agreement, however without any reasons. In the above judgment also the learned single Judge has not gone into the provisions of law except issuing a mere direction. The said judgement is also not based on any discussion on substantive law or proceedings and therefore does not lay down any law.
If an agreement for sale is registered in respect of immovable property, the same will not be a bar for the owner of the property to effect subsequent transfers in respect of the same property. The Registrar has no right to refuse to register the document, except the documents relating to immovable properties mentioned in Section 22-A of the Tamil Nadu Act and as contemplated under Rule 162 of the Registration Rules.
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2020 (11) TMI 1099 - ITAT HYDERABAD
TP Adjustment - comparable selection - seeking exclusion of only two companies from the final list of comparables i.e. Persistent Systems Ltd. and Sasken Communication Ltd. in respect of software development service transactions - HELD THAT:- We find that the assessee is engaged in the software development services, whereas, Persistent Systems Ld. is engaged in the product development services. The company Persistent Systems Ltd has income from outsourced product development and outsourced enabled services. No adjustment has been made by the TPO on account of these two distinguishing features. The Persistent Systems Ltd., in its P&L Account has declared its income from software development services and products. The TPO ought to have enquired from Persistent Systems Ltd. as to the income from the products that is included in the income from software development services. Therefore, we are satisfied that the said company is functionally different from the assessee company and, therefore, has to be excluded from the list of final comparables as comparable.
Sasken Communication Technologies Ltd. - As decided in SAXO INDIA PVT. LTD VERSUS. ACIT, [2016 (2) TMI 604 - ITAT DELHI] though the break-up of revenue from software services and software products is available, but, the break-up of operating costs and net operating revenues from these two segments have not been the TPO has taken entity level figures for the purposes of making comparison. Since such entity level figures contain revenue from both software services and software products, as against the assessee only providing software services, we are disinclined to treat this company as comparable. The assessee's contention is accepted on this issue we direct the AO/TPO to exclude Sasken Communication Technology Ltd. from the list of final comparables.
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2020 (11) TMI 1098 - ITAT DELHI
TP Adjustment - international transaction of purchase of fixed assets - charge of markup by AE to assessee at rate of 8% on certain fixed assets purchased by the assessee - Whether the transaction of purchase of fixed assets is covered as an international transaction or not ? - HELD THAT:- As relying on case of Honda motorcycle and Scooter India private limited. [2015 (4) TMI 502 - ITAT DELHI] here cannot be adjustment in the hands of the assessee with respect to the arm’s-length price of the international transaction of purchase of fixed assets per se. In the present case the arm’s-length price adjustment is only on account of purchase of fixed assets. Admittedly the assessee has not claimed any depreciation during the year. However whenever assessee claims depreciation on that the adjustment with respect to the above transaction would impact the actual cost of the asset. Therefore, in absence of any claim of depreciation by the assessee we direct the learned transfer pricing officer/assessing officer to delete the above adjustment to the total income of the assessee. Appeal of the assessee is allowed.
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2020 (11) TMI 1097 - ITAT BANGALORE
TP Adjustment - comparable selection - HELD THAT:- M/s. Infosys Technologies Ltd is not functionally comparable since it owns significant intangible and has huge revenues from software products. Also breakup of revenue from software services and software product is not available.
Persistent Systems Limited company has acquired certain intellectual property products and generate revenue from licensing and support of such products. It is also observed that this company is involved in the entire life-cycle of software development which is not similar to what assessee caters to its associated enterprises. Assessee carries out only such functions which are required by associated enterprise under its supervision and guidance.
Mindtree Limited company carries out research and development activities and has created large intangibles. Under such circumstances we do not find this company to be comparable with that of a captive service provider like assessee.
Thirdware Solutions Limited to be included as a comparable in the list of comparables.
I2T2 India Limited - We find force in the argument of Ld. D.R. as seen from the direct report of the I2T2 India Ltd. for the year ending on 31.3.2014, which is placed on record in page no.1837 that assessee is engaged in IT enabled services industry and it cannot be compared with assessee’s case, which is engaged in Software development services marketing support services and data centre services and accordingly, exclusion is justified. We confirm the findings of the loer authorities on this comparable.
Daffodil Software Limited - submissions of the Ld. A.R. is that this comparable passes all filters adopted by TPO and the software development services revenue is more than 75% and hence in the interest of justice, we remit this issue to the file of TPO to see whether this comparable passes all filters adopted by TPO. Accordingly, this issue remitted back to AO/TPO for fresh consideration.
Companies functionally dissimilar with that of assessee software development services need to be deselected.
Disallowance of depreciation claimed in respect of additions made during the previous year - HELD THAT:- As rightly pointed out by the Ld. D.R., the DRP has already given a direction to A.O. to consider the additional information given by the assessee on this issue. However, assessee has not furnished all the bills & vouchers with regard to the acquisition of various fixed assets. Once again, we direct the assessee to furnish necessary information before A.O. and the A.O./TPO shall examine the same in the light of the bills & vouchers produced by the assessee.
Disallowance of travelling expenses and legal & professional expenses - HELD THAT:- On this issue also, assessee has not produced all the bills & vouchers. Once again we direct the assessee to produce the same before A.O. On production of these evidences, A.O. shall re-examine the issue.
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