Maintainability of petition - requirement of certified copy of the petition mentioned order - HELD THAT:- All that the petitioner wants is that he should be provided with certified copy of the petition mentioned order. In this regard, the petitioner has given a representation on 30.01.2020 - No exception can be taken to the said request.
The respondent are directed to furnish the petitioner with certified copy of the said order at the earliest - petition allowed.
Restraint on Respondent Liquidator to create any third party interest by way of auction, sell or proceed to deal with the property otherwise or deal with the EMD remitted by Applicant - liability to pay the sum of ₹ 6 Lakhs to the Liquidator over and above the successful bid amount of ₹ 130 Lakhs - HELD THAT:- It is seen that the Applicant has paid a sum of ₹ 10 Lakhs as EMD and the remaining sum of ₹ 120 Lakhs is yet to be paid and the Counsel for the Applicant has submitted that they are ready with the amount to be paid to the Liquidator. Taking into consideration, the said representation, we direct the Applicant to pay the remaining amount of ₹ 120 Lakhs to the Liquidator within seven days from the date of receipt of the Order. Further, the Applicant is also directed to pay a um of ₹ 6 Lakhs to the Liquidator towards Maintenance Security Deposit within the said period of 7 days from the date of receipt of this order and the same to be remitted to DLF. Upon receiving the total bid amount and the Maintenance Security Deposit, the Liquidator is directed to execute the sale deed and hand over the possession of the property along with title documents within a period of 7 days thereafter and further it is clarified that the Liquidator will pay the pending tax arrears to MCD as undertaken.
Payment of royalty on sales to its AE - HELD THAT:- As no distinguishing decision has been brought to our notice respectively following the decision of the coordinate bench [2015 (5) TMI 350 - ITAT DELHI] we direct the AO/ TPO to delete the addition on this account. This ground is accordingly allowed.
Disallowance of CSR expenditure - HELD THAT:- The assessee has placed on record the list of the expenditure before us. The perusal of the same reflects the expenditure on certain renovation work at Mohindergarh including providing chairs and tables by the assessee. Further expenses are debited on account of Tools for Honda Training Center Lab- Mohindergarh. All the said expenses are incurred for efficiently carrying out the business of the assessee and thus fulfill the condition of wholly and exclusively for the purpose of business. Further, the donation to Brahma Kumaris merits to be disallowed in the hands of the assessee, as it is case of charity. The same may be looked into as per the provision of section BOG of the Act. Further, expenditure incurred towards display of name/logo of the assessee on various items is undoubtedly for the promotion of the business of the assessee as it promotes goodwill. Hence, the expenditure is to be allowed as revenue expenditure.In the light of the above we direct the AO to delete the impugned addition. However, we make it clear that amount being paid to Brahma Kumaris need not be deleted.
Disallowance of expenditure on signages - HELD THAT:- As decided in own case [2020 (9) TMI 62 - ITAT DELHI] the expenditure was incurred on signage for display of the name of the assessee at the dealer’s premises. However, once the same is fixed at dealers site then the Courts have held that it does not satisfy the test of ownership with the assessee and the expenditure is to be allowed as revenue expenditure, We find support from the ratio laid down by the Hon’ble Delhi High Court in CIT vs Honda Siel Power Products Ltd. [2007 (8) TMI 251 - DELHI HIGH COURT]. Thus, we are of the view that the expenditure to the extent claimed by the assessee is to be allowed in the hands of the assessee and not/the entire expenditure.
Disallowance of sales tools expenses - whether the assessee is incurring expenditure to maintain standard format of displaying its products all over India in order to induce prospective customers to clearly identify the exclusive dealers of assessee’s products in India and expenditure incurred was wholly and exclusively for the purpose of his business? - HELD THAT:- The expenditure incurred on Signages expenses was in the nature of advertisement expenditure, which are recurring in nature, incurred for the purpose of business and in the absence of any capital asset being acquired/owned by the assessee, the same was allowable as business deduction under section 37(1) of the Act.
AO while disallowing the claim of the assessee has strongly placed reliance on the decision of Hon’ble Supreme Court in Honda Siel Cars India Ltd. [2017 (6) TMI 524 - SUPREME COURT]. However, the facts of the said case are distinct as in the facts of the said case expenditure was on account of setting up of manufacturing facility and was not for running of the business. The Tribunal in assessee’s own case for Assessment Year 2011-12 while deciding the issue in appeal filed against the order passed u /s 263 of the Act had distinguished the said decision and allowed the claim of the assessee. Hence, Ground of appeal raised by the assessee is allowed.
Capitalisation of royalty - HELD THAT:- The assessee had entered into a technical know-how agreement with Honda Motors Company, Japan under which it was paying lumpsum fee which was the amount in connection with the new models introduced in a year. The total amount paid during the year was ₹ 110.45 crores (approx.) which was’ capitalized by the assessee in its books of accounts and also in the P&L A/c. The assessee also paid running Royalty which was paid for grant of the right to license and manufacturing of two-wheelers in India. The total running Royalty paid was ₹ 378.20 crores (approx.). The said Royalty which is the recurring Royalty paid by the assessee from year to year had been allowed as revenue expenditure in the hands of the assessee in the preceding years. We find no merit in the said exercise carried out by the Assessing Officer and accordingly we direct the Assessing Officer to allow the running Royalty as business expenditure in entirety.
Addition on account of payment of export commission - HELD THAT:- We find that while making the disallowance the TPO has held that assessee failed to demonstrate the benefits derive by it. This proposition of the TPO / DRP also do not hold any water in the light of the principle laid down by the Hon’ble jurisdiction High Court of Delhi in the case of Cushman and Wakefield [2014 (5) TMI 897 - DELHI HIGH COURT] - It would not be out of place to Mention here that in earlier assessment years, this quarrel was restored to the files of the TPO to decide the issue afresh in the light principle laid down by the Hon’ble High Court in the case of Cushman and Wakefield (supra).
As told that in the set aside assessment proceedings the TPO has once again made the addition following the earlier findings that the assessee had failed to provide evidence - we are of the considered view that the assessee has successfully demonstrated not only the benefits but has also shown that the profitability is higher (as per the charts exhibited elsewhere). Considering the totality of the facts we have no hesitation in directing the AO / TPO to delete the impugned addition on account of export commission.
Maintainability of petition under Article 32 of the Constitution - HELD THAT:- The writ petition is accordingly dismissed. However, it shall be open for the petitioners to take appropriate remedy against the order impugned.
Enforcement of Foreign Award - application Under Section 48 of the Arbitration and Conciliation Act, 1996 was dismissed - Limitation for filing an enforcement/ execution petition of a foreign award - condonation of delay in filing the execution petition by the Respondents - Scheme of the 1996 Act for enforcement of New York Convention awards - Malaysian law of public policy while deciding the challenge to the foreign award by Malaysian Courts - foreign award vis-a-vis Public Policy of India.
Limitation for filing an enforcement/execution petition of a foreign award Under Section 47 of the 1996 Act - HELD THAT:- On 10.07.2014, a show cause notice was issued to the Respondents, raising a demand of US $ 77 million, being the Government's share of Profit Petroleum under the PSC. It was contended that the cause of action for filing the enforcement petition Under Sections 47 and 49 arose on 10.07.2014. The enforcement petition was filed on 14.10.2014 i.e. within 3 months from the date when the right to apply accrued - the petition for enforcement of the foreign award was filed within the period of limitation prescribed by Article 137 of the Limitation Act, 1963.
Thus, there are sufficient grounds to condone the delay, if any, in filing the enforcement/execution petition Under Sections 47 and 49, on account of lack of clarity with respect to the period of limitation for enforcement of a foreign award.
Scheme of the 1996 Act for enforcement of New York Convention awards - HELD THAT:- The grounds for refusing enforcement of foreign awards contained in Section 48 are exhaustive, which is evident from the language of the Section, which provides that enforcement may be refused "only if" the Applicant furnishes proof of any of the conditions contained in that provision 12 - The enforcement court is not to correct the errors in the award Under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to "refuse" enforcement, if the grounds are made out.
If the Court is satisfied that the application Under Section 48 is without merit, and the foreign award is found to be enforceable, then Under Section 49, the award shall be deemed to be a decree of "that Court". The limited purpose of the legal fiction is for the purpose of the enforcement of the foreign award. The concerned High Court would then enforce the award by taking recourse to the provisions of Order XXI of the Code of Civil Procedure.
Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award? - HELD THAT:- The Malaysian Courts being the seat courts were justified in applying the Malaysian Act to the public policy challenge raised by the Government of India.
The enforcement court would, however, examine the challenge to the award in accordance with the grounds available Under Section 48 of the Act, without being constrained by the findings of the Malaysian Courts. Merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts to examine whether the award was opposed to the public policy of India Under Section 48 of the Indian Arbitration Act, 1996. If the award is found to be violative of the public policy of India, it would not be enforced by the Indian courts. The enforcement court would however not second-guess or review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award.
Whether the foreign award is in conflict with the Public Policy of India? - HELD THAT:- The enforcement of foreign award would be refused Under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression "public policy of India" occurring in Section 34(2)(b)(ii) is not applicable where objection is raised to the enforcement of the foreign award Under Section 48(2)(b) - Moreover, Section 48 of the 1996 Act does not give an opportunity to have a 'second look' at the foreign award in the award-enforcement stage. The scope of inquiry Under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy.
The amended Section 48 would not be applicable to the present case, since the court proceedings for enforcement were filed by the Respondents-Claimants on 14.10.2014 i.e. prior to the 2016 Amendment having come into force on 23.10.2015.
The enforcement of the foreign award does not contravene the public policy of India, or that it is contrary to the basic notions of justice.
Wilful Defaulter - Reserve Bank's Master Circular on wilful default published on July 1, 2015 - funds diverted by its promoters for purposes other than for which the credit facilities had been accorded - HELD THAT:- On a meaningful reading of the relevant Master Circular, it is evident that any juristic entity can be labelled as a wilful defaulter though the mens rea element of the wilfulness of the default has, per force, to fasten onto some human agency. In other words, the human agencies in control of an inanimate juristic entity have to be found guilty of wilful default within the meaning of such expression as used in the Master Circular for the penal measures to attach to the juristic entity in default and also to the human agencies found responsible for the wilful default - There could be myriad situations covered by the Master Circular and the finding of wilful default. There could be a case where credit facilities were granted without any securities being obtained or personal guarantees being sought. In such a case, even though the human agencies responsible for the actions of the inanimate juristic entity may be found to be in wilful default along with the juristic entity, that is, the borrower, no independent financial obligation would fasten to the human agencies since they may not have extended any guarantee or created any mortgage of their personal properties.
In the present case, since no personal guarantee was furnished by any of the writ petitioners, the moment the money due to Axis Bank was paid in full or was agreed to be received by way of a compromise, the writ petitioners stood rid of their burden as wilful defaulters and their names were liable to be removed from the relevant list. If, however, the writ petitioners continued in their capacity as guarantors in respect of the relevant transactions, the writ petitioners would have continued to be liable till the entire debt was discharged. But as the writ petitioners did not have any personal liability, the moment the resolution was approved and Axis Bank received the payment or is deemed to have received the payment, the names of the petitioners ought to have been taken off the list of wilful defaulters. As a consequence, the moment the writ petitioners were entitled to have their names removed from the list, the first sentence in the relevant sub- clause would not apply.
Though the Reserve Bank has appeared at a belated stage, it has appropriately indicated the position in terms of its Master Circular of July 1, 2015. Accordingly, the Reserve Bank should take immediate steps to ensure that the names of the writ petitioners are removed from the list of wilful defaulters and the deletion will take effect from February 28, 2019.
TP Adjustment - upward adjustment on account of payment for support services - quarrel relates to the receipt of support services for which the appellant has taken TNM Method as the Most Appropriate Method - HELD THAT:- A perusal of the profit and loss account of the appellant company shows that the assessee has not incurred a single rupee on employee cost. Even in the notes of accounts it is mentioned that no provision for retirement benefits has been made in these financial statements as there were no employees on the payroll of the company during the year. These facts clearly show that the assessee was totally dependent on the AE for running its business. But for the support and services provided by the AE, the assessee could not have booked turnover of ₹ 917 crores.
On the basis of these time sheets of the employees of BGEPIL, it raised debit notes on the assessee. This further supports the fact that the appellant was fully dependent on the employees of BGEPIL for support services including assistance in procuring and selling LNG, obtaining information concerning industrial and commercial matters, etc. The receipt of services further find support from the evidences in the form of documents showing compliance to various acts like filing of Income tax return, VAT return, preparation of financial statements, tax audit report, time sheets filled in by BGEPIL employees,
TPO has grossly erred in appreciating the facts in true perspective when he held that the employees of BGEIPL sitting in UK cannot comply with tax provisions in India. The fact of the matter is that BGEPIL was rendering these services from its office situated in India and the employees were very much based in India.
The Tribunal in assessee's own case for A.Y. 2010-11 [2019 (1) TMI 107 - ITAT DELHI] on identical set of facts has deleted the adjustment made on account of disallowance of payment of management services and unit charges by the assessee to its AE - Thus no merit in the upward adjustment and the same is directed to be deleted. - Decided in favour of assessee.
Forgery - debit notes created by the Respondents were totally fraudulent - amounts owed by the Appellants to the Respondents or not - applicability of Section 195(1)(b)(i) as well as Section 195(1)(b)(ii) of the CrPC. - HELD THAT:- There is no doubt that realising the difficulties in their way, the Appellants suddenly changed course, and applied to the Magistrate vide application dated 09.05.2011 to convert what was a properly drafted application under Section 195 read with section 340 of the CrPC, into a private complaint. A reading of the two complaints leaves no manner of doubt that they have been drafted keeping the ingredients of Sections 191 and 192 of the IPC alone in mind – the only argument from the Appellants now being that since certain debit notes were forged prior to their being introduced in the court proceedings, not only would the ratio in IQBAL SINGH MARWAH & ANR. VERSUS MEENAKSHI MARWAH & ANR. [2005 (3) TMI 750 - SUPREME COURT] apply, but also that the ingredients of the “forgery” sections of the IPC have now been made out. While it is important to bear in mind that in genuine cases where the ingredients of forgery as defined in Section 463 of the IPC have been made out, and that therefore, a private complainant should not be left remediless, yet it is equally important to bear in mind the admonition laid down in an early judgment of this Court.
Whether the “forging” of the debit notes, so strongly relied upon by Shri Mishra as being offences under Sections 463 and 464 of the IPC, can at all be said to attract the provisions of these Sections? - HELD THAT:- Even if we are to put aside all the averments made in the two complaints (which clearly attract the provisions of Sections 191 and 192 of the Penal Code), and were to concentrate only on the debit notes that are said to have been “created” by the Respondents, it is clear that the debit notes were not “false documents” under Section 464 of the IPC, inasmuch they had not been made with the intention of causing it to be believed that they were made by or under the authority of some other person. Since this basic ingredient of forgery itself is not made out, none of the sections that are sought to be relied upon in Chapter XVIII of the IPC can thus be said to be even prima facie attracted in the facts of this case.
Writ petitions that were filed against this order have been dismissed by the impugned judgment - Appeal disposed off.
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - application rejected on the ground that the application is barred by limitation and was filled before it more than 3 years after the default - time limitation - HELD THAT:- The Financial Creditors issued a notice of recall dated 7th December, 2017 demanding the payment of the total overdues as on that date within a period of 15 days from the date of notice of recall. Thus the payment for Quarter ending December 2017 to September 2025 will become due and payable and come under default on 22nd December, 2017 i.e. on the expiry of 15 days from the date of default notice which was served upon the Corporate Debtor for recalling the loans. Thus the default cannot occur before the amount becomes due and payable as per the Second Amendment Agreement. Also, on entering into the Second Amendment Agreement on 31st march, 2015 the earlier Agreement shall be subsumed with the Amended Agreement and all the prior Company Appeal (AT) (Insolvency) No.1448 of 2019 defaults shall become irrelevant and the date of default shall be decided as per the Second Amendment Agreement dated 31st March, 2015. Therefore, the Adjudication Authority have wrongly considered the date of default to be 16th March, 2015 for computation of limitation period to file an application before it.
In case there is any discrepancy found in the application relating to the date of default being wrongly pleaded by the financial creditors as contended by the Corporate Debtor. The Adjudicating Authority may ask the financial Creditors to rectify the same. The limitation is a mixed question of law and facts therefore, unless it becomes apparent from the reading of the company petition that the same is barred by limitation the petition should not be rejected by selectively considering the documents on record. The application filed by the Corporate Debtor under Section 7 was required to be admitted by the Adjudicating Authority, but the Adjudicating Authority failed to consider the matter in proper perspective.
Seeking substantive consolidation of the Corporate Debtors into a single proceedings - acceptance, confirmation and all other actions with respect to the resolution plan for the Corporate Debtors - whether the Applicant, being the Operational Creditor, initiating CIRP respect of Respondent No. 1, has any locus standi to maintain the instant Application? - HELD THAT:- Since COC of R1 Company has unanimously decided to liquidate it by appointing Ms. R. Bhuvaneswari as Liquidator in the place of Mr. Srivastava, we hereby permit and direct an appropriate Application can be filed by RP of 1st Respondent by seeking to liquidate the Corporate Debtor and for appointment of Liquidator.
The instant Application is filed on misconception of facts and law, and the Applicant too has no locus to interfere in the CIRP of Respondent No.1 by filing the instant Application and it also lacks merits - Application rejected.
Mr. Satya Pal Jain, Additional Solicitor General of India with Mr. Saurav Goyal, Advocate accepts notice on behalf of respondent no. 1. He prays for some time to assist the court - Mr. Aman Bahri, Addl. A.G. Haryana also prays for time to seek instructions and assist the court.
Insider trading -Insiders and Connected Persons - Unpublished price sensitive information - Period of existence of the UPSI - loss incurred by the Company and a substantially fall in the net sales - HELD THAT:- Investigation has clearly brought out the trades done by the Noticees, who were insiders and also promoters of the Company, while in possession of the UPSI to the detriment of the public shareholders of the Company. The said promoters had virtually offloaded their entire unencumbered holding in the Company during this period. Given that the facts clearly make out a prima facie case of insider trading by the promoters of the Company, is of the considered view that the Non-interference by the Regulator at this stage would result in irreparable injury to interests of the securities market and the investors.
Section 11(4) of the SEBI Act casts an obligation on the Board, in appropriate cases, to impound and retain the proceeds of securities in respect of such transactions either pending investigation nor upon completion of such investigation. The facts in this case compels me to take urgent steps to impound and retain the proceeds of the notional loss avoided allegedly by the aforementioned insiders by invoking the powers under Section 11(4)(d) of the SEBI Act. Considering the facts and circumstances of the case, the balance of convenience lies in favour of SEBI.
Accordingly, as an interim measure, an Ad–Interim Ex–Parte Order for impounding such alleged unlawful notional loss avoided under Section 11(1) read with 11(4)(d) and 11B(1) of the SEBI Act read with Regulation 10 of the PIT Regulations needs to be issued against Rajeev Vasant Sheth, Aarti Sheth and Divya Sheth.
Individual amount of unlawful loss avoided is to be credited to an interest bearing Escrow Account [“Escrow Account in Compliance with SEBI Order dated September 04, 2020 – A/c (in the name of the respective person)”] created specifically for the purpose in a Nationalized Bank. The Escrow Account(s) shall create a lien in favour of SEBI and the monies kept therein shall not be released without permission from SEBI.
Banks are directed that no debits shall be made, without permission of SEBI, in respect of the bank accounts held jointly or severally by the persons mentioned under Table-11, except for the purposes of transfer of funds to the Escrow Account. Further, the Depositories are also directed that no debit shall be made, without permission of SEBI, in respect of the demat accounts held by the aforesaid persons. However, credits, if any, into the accounts maybe allowed. Banks and the Depositories are directed to ensure that all the aforesaid directions are strictly enforced. Further, debits may also be allowed for amounts available in the account in excess of the amount to be impounded. Banks are allowed to debit the accounts for the purpose of complying with this Order.
The persons mentioned under Table-11 are directed not to dispose of or alienate any of their assets/properties/securities, till such time the individual amount of unlawful loss avoided is credited to an Escrow Account except with the prior permission of SEBI. Further, on production of proof by the persons mentioned under Table-11 that the individual amount of unlawful loss avoided has been deposited in the Escrow Account, SEBI shall communicate to the Banks and Depositories to defreeze their respective accounts.
The persons mentioned under Table-11 are further directed to provide a full inventory of all their assets whether movable or immovable, or any interest or investment or charge in any of such assets, including property, details of all their bank accounts, demat accounts, holdings of shares/securities if held in physical form and mutual fund investments and details of companies in which they hold substantial or controlling interest immediately but not later than 7 working days of this Order.
Observations/findings contained in this Order are made on the basis of the Investigation conducted by SEBI in the matter. The findings in this order may be treated as allegations against the respective persons mentioned in Table-11 above for the purpose of show cause against them. Accordingly, the persons mentioned under Table-11 above are advised to show cause as to why suitable directions, including the following, should not be issued/imposed against them under Sections 11(1), 11(4)(d) and 11B(1) of the SEBI Act for the alleged violations of the provisions of Sections 12A(d) & (e) of the SEBI Act and Regulations 4(1) of the PIT Regulations:
a) Directing them to disgorge an amount equivalent to the unlawful loss avoided on account of insider trading in the shares of TJL along with interest;
b) Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.
The persons mentioned under Table-11 are also called upon to show cause as to why appropriate directions for imposing penalty under section 11B(2) and 11(4A) read with Section15G and 15HB of the SEBI Act should not be issued against them for the alleged violations of the aforementioned provisions of SEBI Act and the PIT Regulations.
The persons mentioned under Table-11 may file their replies to SEBI within 30 days from the date of receipt of this Order. They may also indicate in their replies whether they wish to avail an opportunity of personal hearing in the matter.This Order shall come into force with immediate effect and shall be in force till further Orders.
Release of detained goods - applicability of ‘Electronics and IT Goods (Requirement for Compulsory Registration) Order (CRO), 2012’ - HELD THAT:- The goods are to be released on the same terms as have been released in the other cases.
Maintainability of application - application filed by Respondent No. 3 in collusion with Respondent No. 1 and 2 to frustrate the awards including the latest award dated 12th July, 2020 passed in favour of the Appellant - HELD THAT:- Issue notice upon Respondents. Mr. Rishav Banerjee, Advocate waived and accepted notice on behalf of Respondent No. 1. Mr. Aishwarya Kr. Awasthi, Advocate waived and accepted notice on behalf of Respondent No. 3. No further notice needs to be issued on these Respondents. Respondents may file their reply affidavit within two weeks. Rejoinder, if any, may be filed within two weeks thereof.
Notice be served upon Respondent No. 2 only. Appellant to provide mobile Nos./e-mail address of the Respondent No. 2. Notice be issued through e-mail or any other available mode. Requisites along with process fee be filed within three days - List the appeal ‘for admission (after notice)’ on 4th November, 2020.
Rectification of Mistake - Mistake apparent on the face of record or not - Liability to pay Service Tax / GST proportionate to the services provided before / after 30.06.2017 respectively - section 161 of the CGST/KGST Act 2017 - it was held in the case of IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED [2018 (12) TMI 534 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA] that the applicant is liable to pay GST towards work executed under Joint Development Agreement on Land Owner's portion, on the value to be arrived at in terms of para 2 of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, at the time of transfer of possession of the land owner's portion of the flats and that the tax liability arises entirely under the GST Law since possession of land owner's share of flats has not been given to the land owner till the inception of GST Law.
HELD THAT:- The applicant filed the instant application for ROM in the IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED [2019 (8) TMI 395 - AUTHORITY FOR ADVANCE RULING, KARNATAKA], without bringing anything on record to negate the findings in the said order that the possession of land owner's share of flats was not handed over to the land owner till 30.06.2017. Further, the time of supply and point of taxation, for the purpose of valuation, are same in CGST Act 2017 (Notification No.04/2018-Central Tax (Rate) dated 25.01.2018) and Service Tax i.e. Finance Act 1994 (para 2.1 (B) (i) of Circular No.151/2/2012-ST dated 10.02.2012) i.e. liability shall arise at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument (eg. Allotment letter).
It is clearly evident that the authority has considered all the submissions and issued proper orders. Hence there is no error / apparent mistake on the face of the record in the case of IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED.
The applicant filed the instant application for ROM, under Section 161 of the CGST Act, 2017 whereas Section 102 of the CGST Act 2017 is the relevant one for filing the application for rectification of advance ruling - the instant application is not maintainable and is liable for rejection in terms of Section 98(2) of the CGST/KGST Act 2017 and hence the same is dismissed as inadmissible..
Depreciation in respect of assets taken over on amalgamation - HELD THAT:- As decided in own case no infirmity in the order of the CIT(A) who had directed the A.O to allow depreciation on the assets taken over on amalgamation.
Disallowance of expenditure on closure of Thane Factory as business expenditure - HELD THAT:- As decided in own case relying on M/S. NICHOLAS PIRAMAL (INDIA) LTD. [2016 (5) TMI 723 - BOMBAY HIGH COURT] after deliberating on the assessee’s claim of expenses pertaining to closure of its “Thane Unit”, had observed, that the business of manufacturing of drugs at different units constituted single business and closing down of one unit and shifting its activity to other units was an expenditure that was incurred by the assessee for purposes of its business. As the facts leading to the disallowance of “Thane factory” expenses by the A.O during the year under consideration remains the same as were involved in the aforesaid preceding years, therefore, respectfully following the view taken by the Hon’ble High Court we uphold the order of the CIT(A) in context of the said issue during the year under consideration. Accordingly, finding no infirmity in the order of the CIT(A) who had directed the A.O to delete the aforesaid disallowance.
Depreciation on purchase of software application - CIT(A) erred in directing the AO to grant depreciation @ 60% as against 25% granted by the AO - HELD THAT:- As decided in own case expenditure incurred by the assessee on purchase of software application and payment made for acquiring license to use those applications was to be allowed as a revenue expenditure. In the backdrop of the aforesaid settled position of law, we are of the considered view that as the aforesaid software purchased by the assessee did not form part of its profit making apparatus and only facilitated carrying its business more efficiently, therefore, the same was rightly claimed by it as a revenue expenditure. We thus in terms of our aforesaid observations direct the A.O to allow the software expenses.
Disallowance being professional fees paid to M/s. Brown & Wood - HELD THAT:- We notice that assessee has incurred consultancy charges to list the ‘ADR’ in ‘NYSE’ and later dropped this project. The AO treated the expenditure as capital and disallowed the same and simultaneously, invoked provision of section 40(a)(i) and 195 of the Act. We notice that in the similar situation, the Hon’ble Bombay High Court in the case of Nimbus Communications Ltd.[2011 (12) TMI 696 - BOMBAY HIGH COURT] has treated the capital expenditure of share issue expenses, which ultimately aborted public issue. The expenditure does not have enduring benefit to the assessee and allowed these expenses as revenue expenditure by relying on CIT vrs. Essar Oil Ltd. case [2008 (10) TMI 649 - BOMBAY HIGH COURT] since the issue before is similar. Therefore, the ground raised by revenue is accordingly dismissed.
Invoking provision of section 40(a)(i), we are in agreement with the submission of the Ld. AR that these services were rendered outside India and none of the income earned by M/s Brown & Wood is taxable in India and there is no obligation on the assessee to deduct tax.
Payment in foreign exchange for professional services rendered - Whether the payment is towards royalty covered u/s.40(a)(i) of the Act and relied upon the order of AO - HELD THAT:- As decided in M/S. NGC NETWORKS (INDIA) PVT. LTD. [2018 (5) TMI 1148 - BOMBAY HIGH COURT] under Section 40(a)(i) of the Act, under which the expenditure has been disallowed by the Revenue, meaning of royalty as defined therein, is that as provided in Explanation 2 to Section 9(1)(vi) of the Act and not Explanation 6 to Section 9(1)(vi) of the Act. Thus, the disallowance of expenditure under Section 40(a)(i) of the Act can only be if the payment is 'Royalty' in terms of Explanation 2 to Section 9 (1)(vi) of the Act. Undisputedly, the payment made for channel placement as a fee, is not royalty in terms of Explanation 2 to Section 9(1)(vi) of the Act. Therefore, no disallowance of expenditure under Section 40(a) (vi) of the Act, can be made in the present facts.
Amount transferred to Debenture Redemption Reserve - assessee made the reserve after determining the net profit as per the company's Act - Whether there is no provision in Sec. 115J to reduce such amount from the net profit - HELD THAT:- As decided in own case [2012 (8) TMI 696 - ITAT MUMBAI] As rightly held by the CIT(A) the amount in question cannot be said to be a reserve but was only a provision. The liability for which such provision was made was an ascertained or known liability and, therefore, amount was to be reduced from the profit as per P&L a/c prepared in accordance with provisions of Companies Act, 1956 to arrive at the book profits under s. 1I5JA of the Act.
Appeal admitted on the following substantial questions of law:-
“[A] Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance of ₹ 1,72,56,662/- made under section 14A r.w. Rule 8D?
[B] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of ₹ 38,21,121/- made on account of closing stock?
[C] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of ₹ 1,72,72,292/- being the disallowance made under section 14A r.w.r. 8D to the book profit while calculating book profit under section 115JB of the Act?”
Grant of regular bail - serious allegations of siphoning of student scholarship funds, cheating, criminal breach of trust, criminal misconduct, forgery, conspiracy and corruption etc. are levelled against a government official - HELD THAT:- It is well settled that grant of bail involves judicious exercise of discretionary power of the Court, wherein not only the nature of accusations, severity of punishment, nature of evidence, apprehension of influencing the witnesses, tampering with evidence, possibility of accused standing the trial are some of the factors to be considered, but the valuable right of liberty of an individual and interest of society in general also have to be balanced. r 5(i). In the instant case, FIR was registered on 16.11.2018. Pursuant to notification dated 20.03.2019, case was entrusted to CBI and was registered by it on 07.05.2019. Petitioner was arrested on 03.01.2020 and w.e.f. 08.01.2020, he is in judicial custody.
Present is not a case where multiple FIRs were registered with respect to different institutes. One FIR has been registered involving all the private educational institutes. To obviate the compulsion under Section 167(2) Cr.PC, final report has been presented on 30.03.2020 under Section 173(2) Cr.PC only regarding K.C. Group of Institutions, Pandoga, District Una by keeping the investigation open under Section 173(8) Cr.PC. - Even in this challan, twelve persons have been named as accused, out of which six belong to Directorate of Higher Education, Himachal Pradesh, including the petitioner. Five accused persons, who were Drawing & Disbursing Officers posted in different capacities in the Directorate of Higher Education at the relevant time and responsible for various transactions in issue, have not been arrested. This is despite the fact that all of them are facing the same FIR for the same offences and it has been alleged that all of them had conspired together.
Hon'ble Apex Court in [2013 (5) TMI 920 - Supreme Court], titled Nimmajadda Prasad Versus CBI, while observing that white collar crimes were on the rise affecting development of the country as a whole, held that while granting bail, the Court has to keep in mind the nature of accusations, nature of evidence in support thereof, severity of punishment on conviction, character of accused, circumstances peculiar to the accused, reasonable possibility of securing presence of accused at trial, reasonable apprehension of witnesses being tempered with, larger interests of public/State and other similar considerations. At this stage, it is not necessary to establish guilt of accused beyond reasonable doubt. Economic offences need to be viewed seriously.
Present is a case where 22 institutes are involved in one FIR and not in multiple FIRs. Charge-sheet under the FIR qua one of the institute already stands filed through by keeping the investigation open under Section 173(8) Cr.PC. This was to obviate the compulsion under Section 167(2) Cr.PC. - Even if present is a case of socio-economic offence of serious magnitude and respondent may have strong evidence about involvement of the petitioner, yet 'gravity can only beget length of sentence' provided in law, after the trial. Grant of bail cannot be thwarted merely by asserting that offence is grave and therefore, petitioner should remain in custody till the investigation of all 22 private educational institutes is completed, regarding timeline of which, respondent apparently has no clue.
The offending acts are already complete and reflected as such in the records. As per status report, voluminous record has already been seized by CBI during raids conducted by it in 22 private institutes, though investigation is still going on. In such situation, no purpose is going to be served by keeping the petitioner in judicial custody - Investigation should not be carried out indefinitely and forever without any regard to time, considering the interests of all involved. Nonetheless it is open to the respondent to continue to investigate into the matter, however, for this reason, petitioner cannot be permitted to incarcerate as a pre-trial prisoner. His liberty enshrined under Article 21 of the Constitution is also required to be protected.
It cannot be presumed that petitioner will flee justice or will influence the investigation/witnesses. No material in support of these apprehensions has been placed on record. As per status report, CBI has already conducted searches at 22 private educational institutions and seized voluminous physical and electronic record. Premises of petitioner have also been searched. Petitioner is in custody w.e.f. 03.01.2020. He has already been suspended from government service. It is not disputed that he is a local resident and owns immovable properties in the State. The apprehensions expressed by respondent can be taken care of while imposing conditions for enlargement on bail. In the given facts and circumstances of the case, continued custodial interrogation of the petitioner is not necessary Enlargement of petitioner on bail subject to stringent conditions will not pose any threat to society.
The present bail petition is allowed and the petitioner is ordered to be released on bail subject to conditions imposed.
Prohibition of Benami Property Transaction Act proceedings - interim orders passed during pendency of the proceedings against the Petitioner under the Act challanged - HELD THAT:- As far as Interim Application is concerned, there cannot be any injunction without the final order being challenged.
Petitioner states that he will take necessary steps to challenge the order dated 11 May 2020 and seeks leave to withdraw the Petition and to take appropriate action to challenge the order dated 11 May 2020.
Writ Petition as well as Interim Application are disposed of.
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