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Showing 81 to 100 of 1713 Records
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2020 (2) TMI 1633
Seeking necessary directions to realize its security interest and keep its mortgaged assets out of liquidation of Tag Offshore Limited - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- One of the vessels needed to be moved away to prevent any catastrophe. The RP had engaged a professional agency to move m.v. TAG 22 thereby incurring expenditure. He had brought the fact to the notice of the applicant. The applicant in its e-mail dated 04.10.2019 had agreed to reimburse 50% of the total fees. It is contended by the respondent that these expenses would not form part of the CIRP expenses. Unless the applicant makes good the payment it could not be allowed to exit from the Liquidation Process. The expenses incurred thereby could not be directed to be part of the CIRP expenses. It is contended by the applicant that since one of the two vessels in danger held as security by applicant, it could only bear 50% of the expenses involved in averting the collision.
The expenses incurred for securing TAG 22 for preventing the collision could not form a part of the liquidation expenses. More so, when the applicant wishes to exit the liquidation process. Thus, the contention of the applicant to avoid payment is flawed. Even otherwise by the action of the liquidator, the charge of the applicant was protected. The other members of the CoC could not be saddled with any part thereof. The applicant needs to bear the whole of the expenses incurred by the liquidator in protecting its charge. Hence ordered.
Application allowed in part - the applicant may opt out of the liquidation estate u/s 52 of the Code subject to clearance of proportionate CIRP costs and payment of the expenses incurred by the liquidator.
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2020 (2) TMI 1632
TP Adjustment - determination of Arm’s Length Price (ALP) in respect of an international transaction for rendering information Technology Enabled Services (ITES) by the assessee to its Associated Enterprise (AE) - comparable selection - HELD THAT:- Acropetal Technologies Ltd. (`Acropetal) company is engaged in provision of a variety of IT enabled services comprising of Enterprise solutions, IT Infrastructure Management Services, Cloud Services, Greenhouse Gas Management, unlike the Assessee who is a provider of routine IT enabled services. Further, the company is engaged in provision of engineering design services which are in the nature of high end IT enabled services which are in the nature of Knowledge Process Outsourcing ("KPO"), which is not comparable to the Assessee's ITES.
Jeevan Scientific Technologies Ltd. ("Jeevan") - If the service income from the BPO segment alone is considered, the component of service income to the total revenue of this company is less than 75% of total operating revenue. In any event if the turnover of BPO segment is considered it is less than Rs.1 Crore and this company fails to satisfy the TPO's own filter of service revenue from the relevant segment having to be in excess of Rs. 1 crore as the revenue from the BP0 segment of the said company is Rs. 79 lakhs only. The company is therefore not comparable to the Assessee and the DRP's findings on exclusion of Jeevan are right in law and ought not to be interfered with.
iGate Global Solutions Ltd. ("iGate") is engaged in provision of varied services and no segmental breakup of the same is available in its Annual Report. Further. the company's' software services segment is clubbed with its ITEs segment and there is no breakup between the revenues generated from the two segments. During the year under consideration, this company had acquired majority equity interest in Patni Computer Systems Ltd. rendering it incomparable due to it failing the TPO's own filter of having peculiar economic circumstances. In addition, the company owns significant intangibles in its name, which is evident from the balance sheet of the company for the Financial Year 2010-11 - We are of the view that the above reasons given by the DRP for excluding this company as a comparable company is right and does not call for any interference.
Computation of deduction u/s 10A - excluding communication expenses and expenses incurred in foreign currency both from the export turnover as well as total turnover while computing the deduction - HELD THAT:- DRP correctly accepted the Assessee’s alternate contention and held that the expenses ought to be reduced from its export and total turnover by following the judgment of the Hon’ble High Court of Karnataka in CIT Vs Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] thus sums excluded from Export turnover in fact ought not to have been so excluded as per the definition of Export Turnover as defined in Sec.10A of the Act, do not require any adjudication and are accordingly, dismissed.
TDS u/s 195 or 192 - disallowance u/s 40(a)(i) - cross charge of salary paid to Aon Services Corporation, USA - HELD THAT:- It is not disputed by the revenue that in respect of the payments made to Aon Services Corporation, USA towards reimbursement of salary expenses the assessee has duly deducted tax at source u/s 192 of the Act. In fact, in the letter dated 02-03-2015 the assessee has highlighted this aspect in para-2 at page-3 of the aforesaid letter. Though, the assessee has not taken a specific plea that no disallowance u/s 40(a)(ia) of the Act can be made for short deduction of tax at source, yet the fact remains that the aforesaid plea is a legal plea which can be adjudicated on the basis of facts already available on record.
We are of the view, that decision of the Hon’ble Karnataka High Court in the case of Kishore Rao & Others [2016 (4) TMI 430 - KARNATAKA HIGH COURT] clearly supports the plea of the assessee. The decision rendered in case of S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT], taking a view that there can be no disallowance of expenses u/s 40a(ia) of the Act for short deduction of tax at source has been followed by the Hon’ble Karnataka High Court. In the given facts and circumstances of the case, we are of the view that the order of CIT(A) has to be upheld. Therefore, the question whether the payment in question has to be regarded as fees for technical services rendered or mere reimbursement of expenses does not call for any adjudication.
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2020 (2) TMI 1631
CIRP process - modification of interim order - proposed settlement agreement is not all encompassing - HELD THAT:- Since, this is a Corporate Insolvency Resolution Process related to a Housing Project and there are 452 allottees out of whom claims has been submitted by 347 allottees, as stated by the ‘Interim Resolution Professional’, it is opined that since the proposed settlement agreement is not all encompassing, it would be appropriate to modify the Interim Order dated 19th December, 2019 by providing that the ‘Interim Resolution Professional’ shall go ahead with constitution of Committee of Creditors and carry forward the Corporate Insolvency Resolution Process.
Post the appeal ‘for admission (after notice)’ on 25th March, 2020.
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2020 (2) TMI 1630
Validity of notification dated 04.09.2019 passed by the Respondent-State Government amendingthe Schedule I & II of the Chhattisgarh (Adhosamrachana, Vikas Avam Paryavaran) Upkar Adhiniyam, 2005 - revision of rate of Development Cess and Environment Cess - whether State Government is denuded of its power to enact any such provision or not? - matter has already subjudiced before the Hon'ble Supreme Court so far as the validity of the act itself - HELD THAT:- The Petitioner herein is directed to continue depositing of the Cess amount as per revised rate under protest as they have been doing in the past. The said deposit would be subject to the outcome of the Civil Appeals by the Hon'ble Supreme Court. In the event, if the Writ Petitions/ Civil Appeals are decided in favour of the Petitioner/Company, the said amount shall be refunded or adjusted with the other heads payable to the State Government or as may be directed by the Hon'ble Supreme Court while deciding the Civil Appeal.
Petition disposed off.
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2020 (2) TMI 1629
Levy of penalty u/s.271B - turnover of the assessee required the assessee to get his accounts audited as provided u/s.44AB - assessee is an individual who was doing Speculative Transactions in Derivatives and Securities Transactions - HELD THAT:- In the present case, it is clear from the assessment order which shows that the assessment was selected for limited scrutiny to verify the derivatives, (Futures Transactions and Securities Transactions). The assessee has disclosed the loss against the Futures and Options as a speculative loss. However, the Assessing Officer treated the same as a business transaction.
A perusal of the decision in the case of Banwari Sitaram Pasari [HUF] [2013 (1) TMI 234 - ITAT PUNE] has held that when no physical delivery is taken or given, the transaction of buying and selling of commodities is to be considered as speculative transaction and consequently there is no turnover constituted for the purpose of the assessee to get his accounts audited u/s.44AB. As the facts in this assessee’s case are identical it is held that the assessee’s accounts is not liable for audit u/s.44AB. Consequently, the penalty levied u/s.271B of the Income Tax Act, 1961 as levied by the Assessing Officer and as confirmed by the learned Commissioner of Income Tax (Appeals) stands deleted. - Decided in favour of assessee.
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2020 (2) TMI 1628
Jurisdiction - power of Commissioner (Appeals) to sanction balance refund claim suo motu - Assistant Commissioner had not rejected the balance amount and has issued a separate show cause notice to the assessee - HELD THAT:- The Original Adjudicating Authority vide his first order sanctioned an amount of ₹ 2.53 crores approximately out of the total claim of refund of ₹ 22.75 crores approximately made by the assessee. This leads to evident conclusion that the balance refund claim stands rejected by him. In this scenario, the order of the Commissioner (Appeals) allowing the balance refund claim cannot be said to be out of the scope of the impugned order before him.
In any case the subsequent show cause notice also stands decided by the Assistant Commissioner vide his order dated 26/04/2019 sanctioning the refund claim. As such, at the most the objection raised by the Revenue is only of technical objection.
Appeal rejected - decided against Revenue.
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2020 (2) TMI 1627
Disallowance of bonus paid to director u/s 36(i)(ii) - higher bonus is paid to Shri Ashutosh Sharma - recipient of the bonus must have paid Income Tax on the receipt- HELD THAT:- As decided in own case for Assessment Year 2013-14 there is no merit in the AOs contention, even if the assessee arguments of double taxation and the fact of TDS is negated. Any expenditure cannot be disallowed unless it is found to be not wholly and exclusively incurred for the purposes of business. The Assessing Officer, is, therefore, directed delete the disallowance on this account. Appeal of assessee allowed.
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2020 (2) TMI 1626
Revision u/s 263 - claim of deduction under Sec. 54 - claim of the assessee of being the “owner‟ of the mentioned property on the basis of the letter of allotment was absolutely incorrect - letter of allotment, dated 20.02.2010 did not vest any right with the assessee to acquire the aforesaid property, but only created an interest to acquire the same, and that too as per the terms and conditions as would be laid down in the “agreement to purchase‟ the said property - HELD THAT:- In compliance to the query so raised by the A.O, the assessee had vide his reply submitted before him that he had booked the aforesaid flats in February, 2010. Accordingly, the assessee substantiating his claim for deduction under Sec. 54 had furnished with the A.O the complete details as regards the mode and manner of acquisition of the property under consideration on the basis of the allotment letter, that was issued to him by the builder i.e M/s Oberoi Realty Limited on 20.02.2010.
Also, documents supporting the aforesaid fact were also furnished alongwith the reply with the A.O y viz. (i). copies of the allotment letters; (ii). copies of the receipts issued by the builder i.e M/s Oberoi Realty Limited for the payments which were made by the assessee towards purchase consideration (in instalments) of the aforesaid property; and (iii). copy of the bank account of the assessee evidencing the making of the aforesaid payments by the assessee to the builder over the years. We find that the A.O after raising specific queries as regards the basis for treating the aforesaid property as a long term capital asset, and claiming of deduction under Sec. 54 of the Act by the assessee, had only after necessary deliberations accepted the claim of the assessee.
Accordingly, we are of a strong conviction that the A.O only after making necessary verifications as regards the entitlement of the assessee towards claim of deduction under Sec. 54 of the Act, had accepted the same. As such, the observation of the Pr. CIT in the “SCN‟, dated 23/03/2018 that the A.O had failed to make enquiries regarding the purchase and sale of the properties is misconceived, and is liable to be rejected.
The view taken by the A.O that the period of holding of the aforesaid property viz. Flat Nos. 705 & 706, 7th Floor, at Oberoi Exquisite, Goregaon (East), Mumbai, was to be calculated on the basis of the allotment letter that was issued to the assessee by the builder i.e M/s Oberoi Realty Limited on 20.02.2010, can safely be held to be a possible and a plausible view that was found to be in conformity with the view taken by the jurisdictional Tribunal and also that of the non-jurisdictional High Court, on the date on which the assessment was framed by him. Accordingly, we are of the considered view, that the aforesaid conscious and a possible view arrived at by the A.O, could not have been dislodged by the Pr. CIT in exercise of her revisional jurisdiction under Sec. 263 - Appeal of assessee allowed.
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2020 (2) TMI 1625
Striking off name of the Companies from the ROC - HELD THAT:- It is noted that the objections have been filed by the ROC, Respondent-3, Respondent-6 and Respondent-7. The pleadings are complete. The matter is posted for making final submissions.
List on 30.4.2020.
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2020 (2) TMI 1624
Maintainability of petition - availability of alternative remedy of appeal - Section 51 of the Tamil Nadu Value Added Tax Act 2006 - HELD THAT:- There is no error in the order passed by the learned Single Judge and even the ground of breach of principles of natural justice, if at all can be established by the Assessee, the Assessee can very well file an appeal under Section 51 of the Act besides raising the grounds on the merits of the case. Therefore, it does not entitle the Assessee / Appellant to resort to writ jurisdiction invariably in all circumstances for the alleged breach of principles of natural justice.
The Writ Appeal is disposed of by relegating the matter back to the appellate authority - in the present case the appellant could avail the effective alternative remedy - Appeal allowed by way of remand.
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2020 (2) TMI 1623
Rectification u/s 154 - petitioner contends that the respondent is not passing any orders on the said application for rectification, but instead is attempting to collect the outstanding dues arising out of the said assessment order, and that this action on the part of respondent is illegal, arbitrary and violative of Articles 14 and 300-A of the Constitution of India - HELD THAT:- Writ Petition is disposed of directing the respondent to dis pose of petitioner’s application for rectification dt.26.12.2019 filed u/s 154 within a period of four (04) weeks from the date of receipt of copy of the order and till the said application is disposed of, there shall be stay of collection of outstanding demand arising of the said Assessment order dt.23.12.2019 passed against the petitioner.
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2020 (2) TMI 1622
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute before issuance of SCN, or not - HELD THAT:- There is a delay in execution of the work. Various correspondences have been exchanged between the parties before the issue of Demand Notice on 09.04.2016, 18.04.2016, 19.10.2016, 22.11.2016 etc. and also after issuance of notice regarding slow progress of work, delay in clearance of calculations, delay in releasing payments etc. The Respondent has replied to the Demand Notice dated 26.04.2018 on 04.05.2018 disputed the claim. The Respondent vide his letter dated 29.06.2018 intimated to the Petitioner that the various deductions with reasons and claimed that only ₹ 6,007/- is payable. There is some dispute in quality of work also. There are issues in submission of PBG and levy of liquidated damages as per contract terms.
Thus, in case of dispute, this is not the forum to examine and adjudicate as to what extent the claim of the Petitioner is admissible as due and recoverable. Neither the Tribunal in the present proceedings will examine the merits of the respective claims. Moreover, even the adequacy of the dispute has not been seen. It is only to be seen whether the dispute raised by the Corporate Debtor qualified as dispute as defined under sub-Section 6 of Section-5 of the IB Code - Infact there is a dispute with respect to delay in execution of work, quality of work like incomplete foundation, submission of PBG etc. This is not the forum to examine the claim of each party.
The existence of non-disputed debt is sine-qua-non nor for initiation of CIRP under Section 9 of the IB Code, the IB Code is intended to be a substitute to a recovery forum. In the present case, the dispute was raised before the issuance of notice under Section 8 besides the correspondence placed on record shows that the liability has been disputed and there is a plausible dispute pre-exist between the parties - it is reiterated that the claim of the operational debt in question is not free from dispute. Records show that the dispute was raised prior to issuance of notice under Section 8 of the IB Code.
This Adjudicating Authority is of the view that the petition does not qualify for admission under Section 9 of the IB Code and therefore, the same is rejected.
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2020 (2) TMI 1621
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority concluded that in the factual document, there was existence of real dispute which could not be overruled and was of the view that there was substance and plausible contention in pleadings of both sides which require investigation. The Impugned Order shows that with the limited jurisdiction to examine the claim and defence, the Adjudicating Authority concluded that there was dispute as defined in Section 5(6) of the Code and rejected the Application.
On going through the claims being made by the Appellant and claims being made by the Respondents and it appears also that the averments and counter averments required trial which is not possible in the jurisdiction of Section 9 of IBC. Whether or not similar stamp of the Company was being used by the Appellant, which is seen in the debit notes, would be matter of evidence. There has to be prima facie material to doubt a document as forged or fabricated if the same is to be ignored. It is stated that after the Impugned Order was passed, with observations as seen above in para – 33 of the Impugned Order, subsequently, the Appellant has filed FIR. It would naturally take its own course. The Impugned Order need not be interfered.
Considering the limited sphere in which Adjudicating Authority and this Tribunal operate, when we sit down to consider the admitting or otherwise of an Application under Section 7, 9 or 10 of IBC, if we admit or reject the Application on the basis of a document put on record by the opposite side, the aggrieved party has option to move appropriate civil and/or criminal forums and in case it is established in any appropriate proceeding that the document was falsified, forged or fabricated, it will be, inter alia, open for the aggrieved party to move for action under Part II Chapter VII of IBC which deals with Offences and Penalties.
Appeal disposed off.
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2020 (2) TMI 1620
Grant of interest u/s 244A - refund granted to the assessee - HELD THAT:- The law is very well settled that the assessee is is not entitled for interest on interest. However, the manner in which any refund, which has been granted partly to the assessee is to be adjusted first towards interest due to the assessee, and remaining portion should be adjusted towards the tax due to the assessee. This adjustment, if made, would be just and fair and would also be in consonance with the provisions of section 140A of the Act, which talks about the manner of adjustment of amounts paid by the assessee to the Income Tax Department.
We find lot of force in the Petition under Rule 27 of ITAT Rules filed by the assessee, which deserve to be admitted and the prayer sought for thereon deserves to be accepted as such. We accordingly direct the Ld. A.O.to first adjust the part of the refund granted to the assessee towards interest under Section 244A of the Act due to the assessee and the remaining portion if any, shall be adjusted towards the tax portion due to the assessee. This would be in spirit and in consonance with the provisions of section 140A when taxes are paid by the assessee to the Income Tax Department. The same pattern of Section 140A should be followed by the Income Tax Department while granting refund including interest under Section 244A of the Act. Accordingly, the appeal of Revenue is allowed and Petition under Rule 27 of ITAT Rules preferred by the assessee is allowed.
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2020 (2) TMI 1619
Late remittance of employees' contribution to PF and ES - Assessee stated to made payment prior to the due date of filing of the return u/s. 139(1) - Scope of amendment by Finance Act, 2021, to section 36[1][va] and 43B - HELD THAT:- As in Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd Vs. DCIT [2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees’ contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory.
Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee.
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2020 (2) TMI 1618
Appointment in the post of Principal at the Polytechnic colleges - Seeking declaration of Ph.D. being an essential qualification for the post of Principal at the Polytechnic colleges - interpretation of provisions of 2010 AICTE Regulations - whether the 2010 AICTE Regulations, in fact, make it mandatory for candidates vying for the post of Principal to possess a Ph.D. degree? - Conflict of interest - HELD THAT:- A perusal of the qualification table makes it obvious that there can be multiple HODs for different departments (like Engineering, Architecture, Hotel Management, Pharmacy etc). In order to be HOD of any such Department, a prospective candidate needs to have both Master's and Bachelor's degrees in the relevant field. Whereas candidates with a Ph.D. must have had 5 years of experience in the allied field, others without it must have worked for 10 years. Phrased differently, Ph.D. is not mandatory for HOD, and instead results in a 5-year relaxation in requisite work experience. In other words, Ph.D. has been treated equivalent to 5 years teaching experience.
A candidate with Ph.D. degree can become HOD with merely 5 years of work experience, whereas candidates without Ph.D. need to work for 10 years. Although, requirement of experience for becoming Principal is 10 years uniformly, it comes with a stipulation that 3 years must have been spent as HOD or in an equivalent position. Thus, a candidate without Ph.D. would compulsorily need 10 years' experience for HOD and would need to work further 3 years in that capacity, i.e. for minimum of 13 years' experience to become Principal. Those with a Ph.D. on the other hand, can apply for principal-ship within 10 years, as they would have become eligible for HOD with 5 years experience, and could have completed the further 3 years term as HOD in the interregnum. Hence, hypothetically, there is a 5-year eligibility relaxation granted under AICTE Regulations to those with a Ph.D.
Additionally, construction of 2010 AICTE Regulations this way, avoids conflict with the 2014 Chhattisgarh Rules, as extracted above. Even otherwise, given a choice between two interpretations, one which restricts the pool of applicants for public employment and another which enfranchises many, it would be fit the spirit of Article 16 that the expansive interpretation is adopted. Such a recourse would both provide opportunities to a wider meritorious class, will increase competition and concomitantly ensure meritorious selections.
Does the 2016 AICTE Notification retrospectively 'clarify' eligibility conditions for appointment as 'Principal'? - HELD THAT:- The conclusion drawn by the High Court is erroneous for a variety of reasons. At the very outset, no attempt appears to have been made to determine the nature of the 2016 AICTE Notification, as to whether it supplements an obvious omission in the 2010 AICTE Regulations and most importantly its effect on those who have meanwhile acquired vested rights - 'Clarificatory' legislations are an exception to the general Rule of presuming prospective application of laws, unless given retrospective effect either expressly or by necessary implication. In order to attract this exception, mere mention in the title or in any provision that the legislation is 'clarificatory' would not suffice. Instead, it must substantively be proved that the law was in fact 'clarificatory'.
The present case is one where except for the title, nothing contained therein indicates that the 2016 AICTE Notification was clarificatory in nature. The said Notification is framed in a question-answer style and merely restates what has already been made explicit in the 2010 AICTE Regulations. There seems to be no intent to alter the position of law but instead only to simplify what the AICTE had resolved through its original Regulation. The 2016 AICTE Notification is a response to the doubts put forth to AICTE by the public - Even if the 2016 AICTE Notification was clarificatory, it must be demonstrated that there was an ambiguity in the criteria for appointment to the posts of Principal, which needed to be remedied. Clarificatory notifications are distinct from amendatory notifications, and the former ought not to be a surreptitious tool of achieving the ends of the latter. If there exists no ambiguity, there arises no question of making use of a clarificatory notification. Hence, in the absence of any omission in the 2010 AICTE Regulations, the 2016 AICTE Notification despite being generally clarificatory must be held to have reiterated the existing position of law.
Thus, there were no two interpretations possible, and hence Issue Nos. 48 and 64 of 2016 AICTE Notification have, in no uncertain terms, reprised the substance of 2010 AICTE Regulations.
Whether retrospective changes in qualificatory requirements can affect the existing appointments? - HELD THAT:- There is no quarrel that the Appellants herein do not possess Ph.D. However, they satisfied the requirement of having fifteen years' experience (of which at least three years was as HOD) under the 2014 Chhattisgarh Rules and were found suitable for promotion by the Departmental Promotion Committee on the basis of various other material. They have also been found in possession of one of the eligibility criteria prescribed under the 2010 AICTE Regulations - the Appellants' appointments ought to remain undisturbed in any eventuality.
Conflict of interest - HELD THAT:- It is not in dispute that the State Government had inducted Appellant No. 1 in a Committee which submitted the draft service rules. It is, however, difficult to accept (nor has it been alleged) that the said Appellant held a position through which he could influence the rule-making authority to exercise its powers under Proviso to Article 309 of the Constitution as per his wishes. He was holding too small a position that no inference of his dominance in the decision making process can be drawn.
The judgment of the High Court is set aside and the writ petition filed by Respondent No. 1 challenging the promotion of Appellants is dismissed - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 1617
Disallowance of interest expenses u/s. 37(1) OR u/s. 40A(2)(b) - during the course of scrutiny assessment proceedings AO noticed that the assessee has paid interest @ 18% and in one case even 21%, to the persons specified u/s 40A(2)(b) - CIT(A) restricted the disallowance to interest payment in excess of 15% - HELD THAT:- We find that there is no indication by any of the authorities below to the effect as to on what basis the market rate of interest has been ascertained. We have also noted that the loans are fully unsecured and on demand. Under these circumstances, and in the absence of any material to indicate that the interest rate paid by the assessee is excessive or unreasonable, we are of the considered view that the interest paid by the assessee is not hit by the provisions of section 40A(2)(b). In any event, the unsecured loans on demand being taken at interest @ 18%, or even @ 21%, are quite in consonance with the ground realities in business. It is also an undisputed position that the assessee had borrowed secured loans from banks @ 17% p.a. The impugned payments cannot therefore be said to be excessive - We direct the Assessing Officer to delete the impugned disallowance.
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2020 (2) TMI 1616
Principles of natural justice - power vested in him by law while initiating proceedings to classify the borrowers/directors of the company as wilful defaulters or not - allegation of initiation of proceedings with preconceived mind - improper constitution of the identification committee - HELD THAT:- It is undoubtedly true that although a Writ Court would be slow in entertaining a challenge to a show-cause notice, a challenge can indeed be entertained if objection is taken on the ground of lack of authority or jurisdiction of the officer/authority issuing such notice. In the event, the Court arrives at a conclusion that the officer issuing the show-cause notice lacks authority or jurisdiction to issue it, it goes without saying that the notice has to be quashed with the competent officer/authority being left free to issue notice afresh in accordance with law.
Having regard to the scheme enshrined in the master circular as well as the object and purpose which is sought to be achieved by enforcement of the provisions thereof, in our considered view, the omission of the appellant no.2 to refer to the decision taken by the committee neither invalidates the show-cause notice nor is it bad only because the master circular does not expressly provide for delegation of power to issue the show-cause notice to any other officer of the bank - there can be no doubt that the master circular has been introduced to check siphoning of public funds by borrowers who, in the opinion of the lender bank, despite having resources to discharge their debt, neglect or omit to do so with a view to defraud the lender. While it is true that declaring a borrower as a wilful defaulter may result in evil/civil consequences, there are adequate safeguards provided in the master circular which are conceived in the interest of the borrower.
However, in the instant case, the power has been exercised by the identification committee to prima facie identify the company as a wilful defaulter and such committee also retained the power to consider the objection that might be raised by the company and/or its directors as to why it/they should not be declared as wilful defaulters, prior to a final order being made in this behalf in accordance with the master circular by the review committee. What the identification committee has delegated to the regional office of the appellant no.1 is the issuance of the show-cause notice indicating the grounds on which the identification committee, prima facie, is of the view that there has been an occasion of wilful default on the part of the company and/or its directors - the regional office proceeding to issue the show-cause notice, even in the absence of express power of delegation, is insufficient to invalidate the proceedings that have been initiated under the master circular to declare the borrower and others, responsible for discharging the debt of the appellant no.1, as wilful defaulters.
The show-cause notice appears to have been issued by the appellant no.2 pursuant to the decision of the identification committee taken in its meeting dated 29th June, 2017. Thus, there are no reason to hold that the show-cause notice suffers from a lack of jurisdiction rendering it vulnerable - Once it has been brought to the notice of the borrower that a proceeding has been initiated to declare him as a wilful defaulter on the ground mentioned in the show-cause notice, it becomes imperative for the borrower to dispel the prima facie conclusion that the identification committee might have reached and to urge that the proceedings be dropped. It is for this reason that we have refrained from examining the other contentions of Mr. Banerjee that there has been no consideration of the relevant documents which would justify even a prima facie conclusion that the writ petitioners had wilfully defaulted in repaying their debts and, therefore, created a situation where the appellant no.1 could declare them as wilful defaulters.
Appeal allowed.
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2020 (2) TMI 1615
Recovery of service tax dues - Club and association services - doctrine of mutuality - service rendered during the period between 01.04.2015 to 31.03.2016 - Section 73(2) of the Finance Act, 1994 - HELD THAT:- The issue, as to whether the petitioner has liable to pay the service tax or not is now covered by a decision of the Hon'ble Supreme Court in the case of STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 - SUPREME COURT]. For earlier periods between 01.10.2008 and 31.01.2014 and between 01.02.2014 and 31.03.2015, an order has been passed by this Court in M/S OOTACAMUND CLUB VERSUS THE ADDITIONAL COMMISSIONER, O/O. THE COMMISSIONER, CENTRAL EXCISE, CUSTOMS & SERVICE TAX [2020 (1) TMI 198 - MADRAS HIGH COURT] following the decision of the Hon'ble Supreme Court in the case of State of West Bengal and others Vs Calcutta Club Ltd and Chief Commissioner of Central Excise and Service Tax and Another Vs Ranchi Club Ltd. - it was held that from 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members’ clubs in the incorporated form.
Petition allowed.
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2020 (2) TMI 1614
Maintainability of petition - lack of prosecution - HELD THAT:- Nobody turned up on the side of the applicant - Appeal dismissed for the want of prosecution.
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