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2020 (9) TMI 1170 - SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI
Insider trading - Insiders and Connected Persons - Unpublished price sensitive information - Period of existence of the UPSI - loss incurred by the Company and a substantially fall in the net sales - HELD THAT:-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.
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2020 (9) TMI 1168 - SC ORDER
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.
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2020 (9) TMI 1167 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
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.
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2020 (9) TMI 1166 - AUTHORITY FOR ADVANCE RULING, KARNATAKA
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 [2019 (8) TMI 395 - AUTHORITY FOR ADVANCE RULING, 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..
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2020 (9) TMI 1165 - ITAT MUMBAI
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.
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2020 (9) TMI 1164 - GUJARAT HIGH COURT
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?”
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2020 (9) TMI 1163 - HIMACHAL PRADESH HIGH COURT
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.
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2020 (9) TMI 1162 - BOMBAY HIGH COURT
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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2020 (9) TMI 1161 - SC ORDER
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Operational Debt - it was held by NCLAT that there is no illegality or infirmity in the Order passed by the Adjudicating Authority - HELD THAT:- There are no reason to interfere with the impugned order dated 10.08.2020 passed by the National Company Law Appellate Tribunal, New Delhi.
Appeal dismissed.
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2020 (9) TMI 1160 - KARNATAKA HIGH COURT
Violation of the Election Code of Conduct - Offences under Section 123(3) of the Representation of the People Act, 1951 - Whether when a complaint has been lodged and/or information furnished of an offence to a Station House Officer, the Station House Officer can himself seek for permission to investigate a non-cognisable offence or as a corollary to it, it is only the informant/complainant, who is to seek permission for investigation from the Magistrate? - HELD THAT:- The Magistrate enquired with the Informant, perused the requisition and found that there is a prima facie case made out, requiring permission to be granted for investigation - Even otherwise, since the Informant herein is a public servant acting or purporting to act in the discharge of his official duties as belonging to the flying squad deputed by the Election Commission, there was no need for sworn statement of the Informant to be recorded, since the Provisio to section 200 exempts the same - thus, it cannot be said that the order permitting the investigation has been passed only on the basis of the requisition sent by the Investigating Officer. The same has been passed after the Investigating Officer having referred the Informant to the Magistrate, who having enquired with the Informant passed the order.
Whether the complaint as regards violation of Section 123(3) of the Representation of Peoples Act, 1951 is limited to the candidate or does it extend to any third party? - Whether the violation of Section 123(3) of the Representation of Peoples Act, 1951 would amount to a penal offence making such person liable for criminal prosecution? - Whether promotion of enmity or hatred is a sine qua non for invoking section 125 of the Representation of Peoples Act, 1951 - HELD THAT:- With the advent of democracy and the election process there have been several aspects relating to the elections, which have resulted in litigations. With the passage of time, laws have been evolved to regulate the electoral system. These electoral laws are aimed at maintaining a level playing field, so no one gets an undue advantage over the same - Various laws over a period of time have restrained or regulated various actions on the part of the candidate or his agent or representatives. Generally speaking, any violation of these electoral laws was regarded to be corrupt practices. Essentially any corrupt practices used by the candidate to get an unfair advantage would result in disqualification of the candidate.
The R.P Act does not contemplate any action against the agent or any other person, who is acting with the consent of the candidate. As stated above, any action for violation of Section 123 of the R.P. Act leads back only to the candidate, if proved resulting in disqualification of the candidate or voiding the result of the election - Similar provisions as under Section 123(2) and (3) of the R.P. Act are not available under Chapter III Part VII relating to Electoral Offenses. There is no provision which makes a corrupt practice under Section 123(2) or (3) of the R.P. Act as an offence under the said Chapter. Thus, no criminal prosecution can be laid on account of the violation of Section 123 of the R.P. Act against any person. Of course, if there is any violation of a penal statute or special statute, separate prosecution could always be laid - An action for violation of Section 123 of the Representation of Peoples Act, 1951, can only be initiated against the candidate seeking for his/her disqualification and voiding of his/her result in the event of such candidate having returned successfully, hence no action can be taken against the agent or a person authorised by him for such corrupt practice in terms of section 123 of the Representation of Peoples Act, 1951 - Violation of Section 123 of the Representation of Peoples Act, 1951 in the present scheme of the legislation would amount to corrupt practice, providing a cause of action for filing of an election petition under Section 81 read with Section 100 and 101 of the Representation of Peoples Act, 1951; there can be penal action initiated by way of criminal prosecution.
Whether in the present case on the basis of the allegation made in the complaint can it be prima facie concluded that the Petitioner has committed an offence under Section 171F of the IPC by exercising undue influence on the persons who had gathered for election rally in terms of Section 171C of the IPC? - HELD THAT:- The exercise of undue influence in terms of Section 171C would only arise in the event of a person threatening any candidate or voter, or any person in whom a candidate or voter is interested, with injury of any kind or induces or attempts to induce a candidate or voter to believe that he or any person in whom he is interested will become or will be rendered an object of divine displeasure or spiritual censure - That means to say that there have to be statements made or threat given to a voter that if he were to vote in any particular manner, he may incur displeasure of the divine or censure by spiritual censure. Unless these two ingredients are satisfied, there cannot be undue influence said to be used and therefore an offence under Section 171F could not be said to be committed - As regards undue influence, if it is to be contended that the speech of the Petitioner amounted undue influence it has to satisfy the dual requirement under Section 171C of the IPC. An ex-facie reading of the complaint does not make any allegation to satisfy the requirement of Section 171C of the IPC. Thus, when the basic requirement is not fulfilled, the criminal law cannot be set in motion, as regards an action, which does not amount to a penal offence.
Thus, in the present case on the basis of the allegation made in the complaint it cannot be prima facie concluded that the Petitioner has committed an offence under Section 171F of the IPC by exercising undue influence on the persons who had gathered for an election rally in terms of Section 171C of the IPC.
What is the procedure to be followed by the Magistrate when a B-report is filed? - Can a Magistrate suo moto reject the B-report without notice being ordered on the complainant? - Whether the Magistrate can suo moto take cognisance of the offence without issuance of notice to the complainant? - HELD THAT:- This procedure has been enshrined in order to protect a citizen of the Country from unnecessary harassment after submission of the B-report, when a B-report has been submitted, it is generally accepted. It is only in exceptional cases, where the B-report has been filed and the complainant is not agreeable to the B-report that the enquiry is conducted under Section 200 of Cr.P.C.; in a proceedings pertaining to non- cognisable offences, the station house officer is not entitled to take cognisance of the non- cognisable offence, it is only on being directed by the jurisdictional Magistrate that he conducts an investigation to enquire as to whether there is prima facie offence made out; once the investigation leads an adverse report in terms of no offence having been made out, it is only the complainant, who can find fault with such investigation or B-report and requests the Magistrate to continue with the matter on the basis of the complaint filed by finding out defects in the investigation and/or by establishing otherwise that there is a prima facie case made out for the prosecution of the accused. In the present case, no notice was issued to the complainant, the Magistrate has rejected B- report without anyone objecting to the B-report and has taken cognisance of the alleged offence suo moto, such a procedure is neither contemplated nor sanctioned under the provisions of Criminal Procedure Code - no criminal prosection can be laid for violation of Section 123 of the R.P. Act. As answered to the points above, I am of the considered opinion that the complaint as such does not make out any case under Section 125 of the R.P. Act or Section 171F of IPC. Thus the question of setting the criminal law into motion on the basis of the complaint which does not prima facie make out an offence, is not sustainable.
What is the procedure to be followed by the Magistrate before issuance of summons to a accused, who is not residing within its jurisdiction? - HELD THAT:- No such summons could be issued without first examining the complainant and his witness if any on oath in terms of Section 200 of the Cr.P.C. Since in the present case, the Petitioner is not resident within the territorial jurisdiction of the Magistrate, the above procedure ought to have been complied with - The registration of complaint and issuance of summons to the accused is violative of Section 202(1) and 202(1) proviso (b) of the Cr.P.C. 11.5. The question that would arise in regard to the above contention is what is the enquiry that the Magistrate would have to conduct. There would have to be an order passed under Section 202(1) of the Cr.P.C. to indicate as to why process is being issued by the Magistrate to an accused who is not residing within the jurisdiction of that Court and for this purpose, sworn statement of the complainant as also the affidavit evidence if any of the complainant's witnesses could be recorded leading to an order by the Magistrate based on his satisfaction that there are sufficient grounds for issuing summons to such accused residing outside its jurisdiction. Such order not having been passed by the magisterate, the summons could not have been so issued.
Whether the Magistrate could have at the stage of taking cognizance relied upon the video recording in a compact disk, without it being accompanied by a certificate under Section 65-B of the Indian Evidence Act? - HELD THAT:- The electronic document cannot be considered to be evidence during trial without a certificate under Section 65-B of the Indian Evidence Act, being accompanied with it. In the present case, admittedly there is no trial, which has commenced. Thus, there would be no requirement of Section 65-B certificate at the stage of examination by the Magistrate whether to take cognisance or not, a Magistrate can always look into any electronic evidence, even if unaccompanied by a certificate under Section 65-B of the Indian Evidence Act for the purpose of taking cognisance or not of an offence.
Is this a fit and proper case for this Court to interfere in the orders passed by the Magistrate under Section 482 of Cr.P.C.? - HELD THAT:- It cannot be said that violation of Section 123 of the R.P. Act would require the initiation of criminal prosecution, no allegation or offence in terms of Section 125 within Chapter-III of Part-VII of the R.P. Act, 1951 is made out. The ingredients of the offences under Section 171C and 171F of the IPC have also not been made out. Hence, prima facie there is no offence, which can be said to have been committed by the Petitioner requiring prosecution. Of course, this does not prevent any action to be taken against the candidate for violation of Sections 123 of the R.P. Act.
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2020 (9) TMI 1159 - ITAT BANGALORE
Transfer pricing adjustment made in respect of distribution segment - assessee adopted “Resale Price Method” (RPM) as most appropriate method for the distribution segment - HELD THAT:- We notice that the co-ordinate bench has examined the issue of “most appropriate method” for a distributor of products in the case of Acer India Pvt Ltd [2020 (3) TMI 426 - ITAT BANGALORE]
In the instant case, the assessee has claimed that it has not carried out any value addition to the products imported by it from its Associated Enterprises. Also submitted that the functions to be performed by the assessee as a “distributor”, which is highlighted by the TPO is normal functions performed in the trade circles even by a non-related party - revenue has not negated both these submissions of the assessee. The TPO has also rejected the RPM for the reason that the assessee is incurring Net loss. As held by the Tribunal in various cases that the Gross Profit margin has to be compared under RPM. Accordingly, we are of the view that RPM is the most appropriate method in the facts and circumstances of the case. Accordingly, we direct the AO/TPO to adopt Resale Price Method as most appropriate method and determine the ALP of the transactions accordingly
Transfer pricing adjustment made under ITES segment - assessee adopted TNM method as most appropriate method and Operating Profit/Operating Cost (OP/OC) as Profit Level Indicator (PLI) - Comparable selection - HELD THAT:- Having regard to the submission of the assessee that the segmental results is required to be compared with the assessee company, we are of the view that this issue also requires fresh examination at the end of the AO/TPO. Accordingly we restore this company also to their file for examining it afresh.
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2020 (9) TMI 1158 - MADRAS HIGH COURT
CENVAT Credit - capital goods which were not specified in the Rule 2(a)(A) of CENVAT Credit Rules, 2004 - Construction materials - Whether the Tribunal committed an error of law in not appreciating the Legislative Intent in insertion of “but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other used for construction of factory shed buildings or laying foundation or making structures for support of capital goods” vide Not.No.16/2009-C.E (N.T) dated 7/7/2009 being clarificatory in view of already existing explanation 2 to Sec.2 (k) of CENVAT Credit Rules, 2004 and therefore, operates retrospectively?
HELD THAT:- The matter is no longer res integra and the learned Tribunal has rightly followed the decisions and held in favour of the Assessee - ollowing the three Hon'ble High Court decisions in the appellant's own case cited supra, and also maintaining this Tribunal's order in the case of Dalmia Cements (Bharath) Ltd. Vs CCE Trichy [2015 (8) TMI 1179 - CESTAT CHENNAI], holding that immovability is not a criteria for denial of Cenvat Credit, we hold that appellants are eligible for Cenvat Credit on the capital goods used in "Dry Process Cement Manufacturing Plant". Accordingly, the impugned order is set aside and the appeal is allowed."
There are no merit in the present Appeal and the same is liable to be dismissed.
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2020 (9) TMI 1157 - KERALA HIGH COURT
Maintainability of appeal - non-submission of mandatory 7.5% of the amount confirmed against him by the assessment order, for maintaining an appeal before the First Appellate Authority - non-deposit on account of financial distress - HELD THAT:- Inasmuch as the appeal preferred by the petitioner against the assessment order was numbered by the appellate authority, and was taken up for hearing in 2020, the appellate authority ought to have granted the petitioner an opportunity of paying the deposit amount before proceeding to reject the appeal on the ground of non-payment of predeposit. Had the appellate authority found that the appeal was not one that could be maintained in the absence of the pre-deposit, it ought not to have numbered the appeal and given an impression to the petitioner that he had filed a valid appeal against the assessment order.
The petitioner can be given a month's time to pay the pre-deposit amount required for maintaining the appeal before the 1st respondent - Petition is allowed by quashing Ext.P5 order and directing the petitioner to pay the required pre-deposit amount as per the statute within a month from the date of receipt of a copy of this judgment.
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2020 (9) TMI 1156 - ITAT INDORE
Penalty u/s 271AAB(1)(a) - additional income surrendered by the assessee u/s 132(4) - income disclosed in the return of income filed after search & seizure action - HELD THAT:- Additional income surrendered by the assessee have been accepted by the Department on the basis of the explanation given by the respondent and on the basis of offering the same as business income which is even clearly discernable from the assessment order. It is also not in dispute that the assessee company has no other source of generating income other than the business carried out by it as per the objects for which it is registered. This fact was not in dispute and method and manner of additional income offered was duly explained to the Investigation Wing and also during the course of assessment proceedings which is well evident from the assessment order itself. We find that under the similar facts, we both the undersigned of this order have adjudicated the similar issue in assessee’s another group concern M/s. Keti Sangam Infrastructure (I) Ltd and Keti-T Construction (India) Ltd [2018 (6) TMI 1525 - ITAT INDORE]wherein deleted the penalty levied u/s 271AAA.
Defective notice - As notice clearly spells out that the provisions under which the notice was issued for levy of penalty u/s 271AAA but the charges mentioned therein refers to those provided in Section 271(1)(c) of the Act. Ld. A.O failed to mention the charges provided u/s 271AAA of the Act. We find that this issue is also squarely covered in favour of the assessee by the decision in the case of Gillco Developers & Builders (P) Ltd [2017 (8) TMI 1468 - ITAT CHANDIGARH] wherein the Tribunal after observing that the notice issued is defective held in favour of the assessee and quashed the penalty proceedings
As penalty proceedings carried out in the case of the assess were void ab-initio since the notice issued itself is defective and not in accordance with law. Thus we find no reason to interfere in the finding of Ld. CIT(A) deleting the penalty levied u/s 271AAA - Decided against revenue.
Penalty u/s 271AAB(1)(a) - income offered by the assessee u/s 41(1) on account of writing off outstanding credit balance in the name of a creditor - HELD THAT:- Alleged outstanding amount was offered to tax u/s 41(1) of the Act in the Income Tax Return filed u/s 139(1) of the Act. In these given facts and circumstances of the case, we are of the considered view that the alleged outstanding amount offered to tax u/s 41(1) of the Act on account of “cessation of liability” is not an undisclosed income since the relevant information about alleged undisclosed income was duly recorded in the books before the date of search and sufficient documentary evidences are available to prove this fact. The alleged amount was brought forward from preceding year and thus forming part of audited books of accounts. Thus the amount offered to tax u/s 41(1) of the Act is not a undisclosed income since it was shown in the return of income filed u/s 139(1) of the Act.
Therefore in our view the action of the Ld. A.O levying penalty u/s 271AAB(1)(a) @10% on the alleged undisclosed income was not justified and uncalled for. Therefore Ld. CIT(A) has rightly allowed the ground raised by the assessee on merits of the case holding that penalty was not leviable u/s 271AAB - Decided against revenue.
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2020 (9) TMI 1155 - ITAT BANGALORE
TP Adjustment - comparable selection - HELD THAT:- Assessee is into services rendered under the title “Technical Support Services” and “Research and Development Services”. Both these services have been clubbed together as “Software Development Services” segment for bench marking.The assessee adopted TNM method as most appropriate method and Operating Profit/Operating Cost as Profit level indicator (PLI).
We direct the AO/TPO to apply the upper turnover filter and exclude comparable companies, which are having turnover of more than ₹ 200/- crores.
Companies functionally dissimilar with that of assessee need to be deselected from final list.
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2020 (9) TMI 1154 - NATIONAL COMPANY LAW TRIBUNAL, BENGALURU
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Respondent has addressed a letter dated 13.03.2018 to the Petitioner by inter-alia stating that due to some un-avoidable circumstances, payments are delayed from their clients and funds flow was also not good since financial year ending, promised to clear the dues within 30 days period. When the Respondent failed to honour their promise, the Petitioner has issued demand Notice dated 04.10.2019 under the provisions of Code, and thereafter the Respondent raised dispute vide their Reply dated 13.12.2019. The contentions raised in the Reply is totally contrary to their earlier letter dated 13.03.18, and these contentions/ allegations are not all tenable and they cannot constitute valid and legal dispute. Since the Respondent did not appear before the Adjudicating Authority, the amount involved in the case is mere ₹ 4.35 lakhs, and initiation of CIRP is not a solution for the Petitioner, which is small entrepreneur and operational Creditor. Operational. And chances of getting dues of Operational Creditors are very less in comparisons to secured Creditors.
Instead of keep the case pending for service of notice on the Respondent and getting their reply, interest of both the parties would be met, if the Petition is disposed of by directing the Respondent to settle the issue in question within a stipulated period - Petition disposed off.
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2020 (9) TMI 1153 - ITAT DELHI
Validity of reopening of assessment - information is received by AO from the investigation wing - Addition u/s 68 - assessee was identified as one of beneficiaries who had received bogus/accommodation entries in the form of share capital by entry provider S.K Jain - HELD THAT:- Merely using the expression ‘failure on the part of the assessee to disclose fully and truly all material facts’ is not enough. The reasons must specify as to what is the nature of default or failure on the part of the assessee.
Hon’ble Bombay High Court in the case of Anand Developers [2020 (2) TMI 995 - BOMBAY HIGH COURT] has held that a mere bald assertion by the AO that the assessee has not disclosed fully and truly all material facts is not sufficient. AO has to give details as to which fact or the material was not disclosed by the assessee leading to its income escaping assessment otherwise the reopening is not valid.
We agree with the argument of assessee that the reason to believe that income has escaped assessment is not based on correct facts and the approval has been given in a mechanical manner and, therefore, such notice based on wrong facts and the approval given in a mechanical manner make the re-assessment proceedings invalid being not in accordance with law. Accordingly we hold that the reassessment proceedings initiated by the AO is not valid in the eyes of law. Accordingly the same is directed to be quashed. Since the assessee succeeds on this preliminary legal ground, the other legal grounds as well as the grounds on merit, in our opinion, do not require adjudication being academic in nature. Appeal filed by the assessee is allowed.
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2020 (9) TMI 1152 - ADJUDICATING AUTHORITY, NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD
Maintainability of application - it is submitted that the application so filed by the applicant is not a corporate applicant in view of the fact that the Director has already been disqualified under Section 164 of the Companies Act, 2013 - HELD THAT:- As per the record of financial creditor Central Bank of India, there are five directors. However, subsequently, when it is verified with the MCA portal it is found that the pattern and status of the Directors have been changed and the same was never been informed to the financial creditors viz. CBI. Further, Ms. Neelu Gupta was never been a Director on the Board of the applicant company and as such she cannot execute SPA in favour of Mr. Sanjay Gupta. Further, on perusal of the record it is found that no Board Resolution is ever passed by the company authorising Mr. Sanjay Gupta to file the instant application. Further, on perusal of the record it appears that Mr. Sanjay Gupta obtained Special Power of Attorney in his favour issued by Ms. Neelu Gupta flouting all the norms of the Companies Act thereby the very power given in favour of Mr. Sanjay Gupta is bad in the eye of law and as such the application is not maintainable for want of proper authorisation.
Admittedly, as also matter of record that, the applicant is not a corporate applicant as per form 6, Clause 3, the applicant is not a director and is disqualified under Section 164, wherein the name and address of the Director is shown as "presently, there is no Director on the Board of the Company due to disqualification under Section 164 of the Companies Act 2013". However, clause 3 of form 6 further discloses that the list of promoters along with their address attached.
On perusal of the record i.e. balance sheet as on 31.03.2016 (page 254) it is found that under the head "deferred tax liability" an amount of ₹ 10,34,37,089/- has been shown thereby meaning that no returns have been filed by the company. It is also a matter of record that objector banks have already initiated proceedings under RDDB Act, 1993 and SARFAESSI Act, 2002 and to install the said proceedings, the applicant has filed the instant application, so as to initiate moratorium and to get stayed the proceedings initiated by the banks. Under such circumstances, the instant application has no merits and, therefore, requires to be dismissed.
Petition dismissed.
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2020 (9) TMI 1151 - ITAT MUMBAI
Disallowance u/s 40(a)(ia) of short deduction of tax at source - Disallowance u/s.40(a)(ia) - TDS u/s 194C OR 194J - HELD THAT:- As relying on M/S. TV18 HOME SHOPPING NETWORK LTD [2020 (2) TMI 1397 - ITAT MUMBAI] when there is a short fall in deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act - we uphold the order of the Ld.CIT(A) and reject the ground raised by the revenue.
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2020 (9) TMI 1150 - SUPREME COURT
Sanction under Section 197 Cr.P.C. - Allegation is that is said to be the kingpin involved in this crime and is since absconding - finding that there was a prima facie case made out against the appellant, the Special Judge refused to discharge the appellant from the offences under the IPC - HELD THAT:- A number of judgments have held that the standard of proof in a departmental proceeding, being based on preponderance of probability is somewhat lower than the standard of proof in a criminal proceeding where the case has to be proved beyond reasonable doubt.
In view of the detailed CVC order dated 22.12.2011, the chances of conviction in a criminal trial involving the same facts appear to be bleak. We, therefore, set aside the judgment of the High Court and that of the Special Judge and discharge the appellant from the offences under the Penal Code.
Appeal allowed - decided n favor of appellant.
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