Dismissal of appeals by ITAT for non-persecution - whether the Income Tax Appellate Tribunal has the power to dismiss the appeal for want of prosecution or not? - HELD THAT:- Article 265 of the Constitution mandates that no tax can be collected except by authority of law. Appellate proceedings are also laws in strict sense of the term, which are required to be followed before tax can legally be collected. Similarly, the provisions of law are required to be followed even if the tax payer does not participate in the proceedings. No assessing authority can refuse to assess the tax fairly and legally, merely because the tax payer is not participating in the proceeding. Hence, dismissal of appeals by ITAT for non-persecution is wholly illegal and unjustified.
If we see this issue through the prism of the Principles of natural justice, an appellate authority is required to afford an opportunity to be heard to the appellant. It has been held in plethora of cases that “right to natural justice” is a personal right, either a person can waive it or a person may not avail it. Merely because a person is not availing his right of natural justice, it cannot be a ground of refusal to perform statutory duty of deciding appeal by the Tribunal.
We are of the considered opinion that the Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing.
In view of the above analysis, the Rules and the provisions of the Act would pave way for the Tribunal to reconsider its decision.
Income deemed to accrue or arise in India - Capital gain on sale of shares - can section 9(1)(i) at all be applied and tax charged on the transaction, in the absence of the requisite rules having been framed for the purposes of implementing section 9(1)(i) of the Income-tax Act, 1961 as on the closing date ? - withhold tax u/s 195 on acquisition of shares - HELD THAT:- In this case, the shares of STC (USA) held by the THLPV, solely as representative for the holders of securities of STC (including certain members of the applicant), have entered into an agreement and plan of merger for the transfer of its entire shareholding to STC, Harman International Industries Incorporated, the buyer. The share transaction, in this case is between two non-resident entities STC USA and STG Group involving the shares of STC. The said transaction between two foreign entities is primarily not liable for any taxation in India. However, in this shares of (STC USA) are transacted, which had a presence in India in the form of a subsidiary, M/s. Symphony Teleca Corporation India Private Limited (STCIPL). STCIPL is the wholly owned subsidiary of Global Symphony Technology Group Private Limited, Mauritius. The ultimate holding company of the Indian entity is STC(USA), whose shares are transacted.
It is a fact that during 2012 to 2016, the word "substantially" appearing in Explanation 5 to section 9(1)(i) of the Income-tax Act was not defined in the Act and it was subject matter of scrutiny of the courts in number of cases, i. e., DIT (International Tax) v. Copal Research Ltd. [2014 (8) TMI 606 - DELHI HIGH COURT], GEA Refrigeration Technologies GmbH [2018 (1) TMI 945 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] and Banca Sella S.P.A., In re [2016 (9) TMI 163 - AUTHORITY FOR ADVANCE RULINGS NEW DELHI] and it was uniformly held that "substantially" will mean at least 50 per cent. This position was also clarified by Explanation 6 which was brought in to the statute after recommendation of Expert Committee under Dr. Shome on this issue was accepted by Government and Circular No. 19 of 2015, dated November 11, 2015 affirmed this position.
AR has averred that STC's Indian assets are less than 31 per cent. of its world assets, we are of the view that the capital gain arising on the transfer of the STC shares is not taxable in India under section 9(1)(i) of the Income-tax Act.
Revenue may however, verify the computation furnished by the applicant as per rule 11B and rule 11UC. It is reiterated that the ruling is given based on the facts and figures presented before us and if sub-sequently it is found that the figures are at variance and the actual percentage exceeds 50 per cent., the ruling would not apply and the Revenue would not be bound by such ruling.
The transfer of shares of STC by STG is not chargeable to tax in India under the provisions of section 9(1)(i) of the Income-tax Act. The buyer is not required to withhold tax u/s 195 of the Act on acquisition of shares of STC from STG.
Reference of matter to Larger Bench - contrary opinions by two different Constitution Benches on the interpretation of Article 370 of the Constitution - Temporary provisions with respect to the State of Jammu and Kashmir - alleged contradictory views of this Court in PREM NATH KAUL VERSUS THE STATE OF JAMMU & KASHMIR [1959 (3) TMI 73 - SUPREME COURT] and SAMPAT PRAKASH VERSUS STATE OF JAMMU & KASHMIR [1969 (2) TMI 186 - SUPREME COURT] case? - Doctrine of precedents.
HELD THAT:- The first case which needs to be looked at is the Prem Nath Kaul case which dealt with the validity of the Jammu and Kashmir Big Landed Estate (Abolition) Act, 2007. The main contention on which the Act was impugned was that the Yuvaraj did not have the constitutional authority to promulgate the said Act. One of the arguments canvassed by the Petitioner in that case related to the effect of Article 370 of the Constitution of India on the powers of the Yuvaraj. The Constitution Bench, in deciding that it would be unreasonable to hold that Article 370 could have affected, or was intended to affect, the plenary powers of the Maharaja, made certain observations relating to Article 370 of the Constitution, which the counsel before us arguing for a reference have relied upon. The observations of the Constitution Bench in the Prem Nath Kaul case regarding Article 370 therefore merit reproduction in their entirety - The learned senior Counsel submit that there exists a conflict with the dicta of another Constitution Bench of this Court in the Sampat Prakash case. In the Sampat Prakash case, this Court was seized of a matter pertaining to the detention of the Petitioner in that case under the Jammu and Kashmir Preventive Detention Act 13 of 1964. The main point canvassed before the Constitution Bench was whether the continuation of Article 35(c) of the Constitution (as applicable to the State of Jammu and Kashmir), which gave protection to any law relating to preventive detention in Jammu and Kashmir, through successive Constitution Orders passed in exercise of the powers of the President Under Article 370 of the Constitution, in 1959 and 1964, was valid. The Court held that the Constitution Orders were validly passed in exercise of the power Under Article 370 of the Constitution, which continued beyond the date of dissolution of the Constituent Assembly.
First, it is worth highlighting that judgments cannot be interpreted in a vacuum, separate from their facts and context. Observations made in a judgment cannot be selectively picked in order to give them a particular meaning. The Court in the Prem Nath Kaul case had to determine the legislative competence of the Yuvaraj, in passing a particular enactment - Second, the framework of Article 370(2) of the Indian Constitution was such that any decision taken by the State Government, which was not an elected body but the Maharaja of the State acting on the advice of the Council of Ministers which was in office by virtue of the Maharaja's proclamation dated March 5, 1948, prior to the sitting of the Constituent Assembly of the State, would have to be placed before the Constituent Assembly, for its decision as provided Under Article 370(2) of the Constitution.
This Court is of the opinion that there is no conflict between the judgments in the Prem Nath Kaul case and the Sampat Prakash case. The plea of the counsel to refer the present matter to a larger Bench on this ground is therefore rejected.
Doctrine of precedents - HELD THAT:- The Rule of per incuriam being an exception to the doctrine of precedents is only applicable to the ratio of the judgment. The same having an impact on the stability of the legal precedents must be applied sparingly, when there is an irreconcilable conflict between the opinions of two co-ordinate Benches. However, as indicated above there are no contrary observations made in the Sampat Prakash case to that of Prem Nath Kaul, accordingly, the case of Sampat Prakash is not per incuriam.
There are no reason to refer these petitions to a larger Bench on the questions considered.
Bogus LTCG - exemption u/s. 10(38) denied - certain companies listed in the Bombay Stock Exchange by a group of persons acting as a syndicate in order to provide entries of tax exempt long term capital gains to a large number of persons (beneficiaries) in lieu of unaccounted cash - HELD THAT:- As noticed that the assessee has not been given a fair opportunity to prove the genuineness but the assessment has been made based, primarily, on the evidences collected by the Revenue in the course of the investigation conducted by them on brokers / share broking entities etc. This is not permissible. This being so, in the interests of natural justice, the issue of the genuineness of the transactions require readjudication. Since, the right to exemption must be established by those who seek it, the onus therefore lies on the assessee. In order to claim the exemption from payment of income tax, the assessee had to put before the Income Tax authorities proper materials which would enable them to come to a conclusion. See RAMAKRISHNA DEO. [1958 (10) TMI 9 - SUPREME COURT]
Thus, the AO must keep in mind that the onus of proving the exemption rests on the assessee. If the AO does have any evidence to the contrary, it is to be put to the assessee for his rebuttal. The internal communications of the Revenue are evidences for drawing an opinion on possible wrong claims but they are not the final evidence.
We deem it fit to remit the issues of exemption claim in this appeal back to the file of the A.O. for readjudication on the lines indicated above. Therefore, the A O shall require the assessee; to establish who, with whom, how and in what circumstances the impugned transactions were carried out etc., to prove that the impugned transactions are actual, genuine etc.The assessee shall comply with the A.O’s requirements as per law. The Assessing Officer shall also bring on record the role of the assessee in promoting the company and relationship of the assessee with other promoters, role of the assessee in inflating the price of shares, etc. as had been held by the Co-ordinate Bench of this Tribunal in the case of Shri Aravind Nandial Khatr [2018 (12) TMI 1652 - ITAT CHENNAI] - Assessee’s appeal is treated as partly allowed for statistical purposes.
Classification of supply - supply of services or not - amount recovered from the employees towards car parking charges payable to Shanti niketan Properties Private Limited (building authorities) - valuation of the supply - pure agent or not - input tax credit on supply of car parking services to employees.
Interpretation of the word 'easement' - HELD THAT:- In common parlance the word easement is defined as “a right to cross or otherwise use someone else's land for a specified purpose” - The appellant is providing right to its employee's to use parking facility on the parking space provided by the building authority and for this work they are collecting certain amount from their employee. Accordingly, the activity in question, provided by the appellant, is squarely falls under the Schedule II i.e. “Activities to be treated as Supply of Goods or supply of Service” of the CGST Act, 2017.
Whether the service provided by the appellant would be in the nature of “pure agent”? - what Would be the value for the purpose of tax liability? - HELD THAT:- The Authority of Advance Ruling, Maharashtra, in the case of M/s. DRS Marine Services Pvt. Ltd. [2018 (12) TMI 893 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA], has observed that, “Applicant will be acting as a pure agent of RMS in as much as the entire amount received by them as Crews' Salary will be disbursed to the Crew and no amounts from the said receipt will be used by the Applicant for his own interest” - In the instant case also, it is observed that the appellant has contended that they are transferring the entire amount collected, from their employees towards parking charges, to the Building Authorities. Accordingly, the value of the services in the present case will be NIL, as the appellant is providing the same in the capacity of a Pure Agent, subject to the fulfillment of the conditions prescribed for “Pure Agent”.
Input tax credit against supply of car parking services to employees - HELD THAT:- Though the activity undertaken by the appellant is a supply of service, in terms of Section 7(1) of the CGST Act 2017, however the value of the service would be nil, as the appellant is acting in the capacity of Pure agent for their employees, subject to the fulfillment of conditions. Accordingly the question becomes redundant.
Non-payment of interest on the gross amount - adjustment of ITC lying to the credit of the Petitioner - HELD THAT:- Reply be filed before the next date of hearing. Till the next date, no coercive action shall be taken against the Petitioner for non-payment of interest on the gross amount, provided the interest on the net amount payable after adjustment of ITC lying to the credit of the Petitioner is made.
Let notice be issued to the other respondents returnable on 22.04.2020.
Compromise and arrangements - Seeking directions regarding dispensing with holding of any meetings of unsecured creditors and meeting of shareholders for the approval of the scheme - seeking approval of scheme A submitted by M/s. Seshasayee Paper and Board Ltd., or scheme B submitted by M/s. Sun Paper Mill Ltd., in the interest of the justice - HELD THAT:- In a transaction of a reasonable magnitude as in the present instance, the quantum of payment offered by the respective proponents in their respective schemes to the different stake holders are almost on an even keel save some differences here and there. The financial capability and wherewithal to execute the respective schemes if either one is chosen, is also exhibited by both the scheme proponents as evident from the earlier paragraphs. Both the scheme proponents also belong to the industry as to the one being carried by the company in liquidation. Thus a piquant situation arises.
In a transaction of a reasonable magnitude as in the present instance, the quantum of payment offered by the respective proponents in their respective schemes to the different stake holders are almost on an even keel save some differences here and there. The financial capability and wherewithal to execute the respective schemes if either one is chosen, is also exhibited by both the scheme proponents as evident from the earlier paragraphs. Both the scheme proponents also belong to the industry as to the one being carried by the company in liquidation. Thus a piquant situation arises.
Thus armed with the wisdom gleaned from the precedents as cited above as well as a somewhat elaborate discussion which necessitates this Tribunal to address a problem which has been put in its lap for which a dynamic solution is required to be found without being too analytical and at the same time without losing track in any way the objectives of the Code for which it was framed including for the resolution of insolvency and re- organisation which includes within its ambit revival and restructuring within a speedier time frame for maximization of value of its assets of the company in liquidation.
Let the scheme approved based on the voting method be placed before this Tribunal for its sanction within a period of 60 days from the date of this order.
Maintainability of appeal under section 60(1) of IBC - money advanced constituted a ‘financial debt’ - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 not dealt with - HELD THAT:- It emerges from the record that the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“I&B Code” for short) has not been dealt with at the stage of admission and no order has been passed either admitting or rejecting the application.
Mere finding on an Interlocutory Application that the debt claimed by the Creditor constituted a ‘financial debt’ would not ipso facto justify admission or rejection of the application as learned Adjudicating Authority is required to consider the debt along with default and unless there is a finding in respect of default and an order of admission is passed, ‘Corporate Insolvency Resolution Process’ does not commence. Viewed in this perspective, it is futile to contend that the appeal in terms of Section 60(1) shall be maintainable.
Entitlement to pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme - whether, under the scheme as approved and adopted by the Central Board of SBI, the pension is admissible to the employees on completion of 15 years of permanent service?
HELD THAT:- It is apparent that once the Central Board of Directors accepted the memorandum for making payment of pension, in case it was not accepting the proposal in the memorandum, it ought to have said clearly that it was not ready to accept the proposals of the Government and the IBA and rejects the same. Once it approved the proposals referred to in the memorandum, which were on the basis of IBA's letter and Government of India's decision it was bound to implement it in true letter and spirit. By accepting the same, binding obligation was created upon the SBI to make payment of pension on completion of 15 years of service. It cannot invalidate its own decision by relying on fact it failed to amend the rule, whereas other Banks did it later on with retrospective effect. They cannot invalidate otherwise valid decision by virtue of exclusive superior power to amend or not to amend the Rule and act unfairly and make the entire contract unreasonable based on misrepresentation.
It is apparent from the eligibility Clause of the VRS scheme that eligibility is provided for the employees having 15 years of pensionable service and they will be entitled for benefits as provided in the scheme. The eligibility clause, when read with clauses providing the benefit, i.e., clauses 5 and 6 of the scheme, leaves no room for any doubt and makes it clear that employees with 15 years of service were treated as eligible to claim the benefit of the scheme floated by SBI. It was not the provision in the VRS scheme that incumbents having completed 20 years of service would be entitled for pensionary benefits. The scheme was carved out specially for attracting the employees by providing pension and other benefits to eligible persons like ex gratia, gratuity, pension and leave encashment. Deprivation of pension would make them ineligible for the benefits and would run repugnant to the eligibility clause.
The basic framework of socialism is to provide security in the fall of life to the working people and especially provides security from the cradle to the grave when employees have rendered service in heydays of life, they cannot be destituted in old age, by taking action in an arbitrary manner and for omission to complete obligation assured one. Though there cannot be estoppel against the law but when a bank had the power to amend it, it cannot take shelter of its own inaction and SBI ought to have followed the pursuit of other banks and was required to act in a similar fair manner having accepted the scheme.
The employees who completed 15 years of service or more as on cut-off date were entitled to proportionate pension under SBI VRS to be computed as per SBI Pension Fund Rules. Let the benefits be extended to all such similar employees retired under VRS on completion of 15 years of service without requiring them to rush to the court - Appeal disposed off.
Interpretation of statute - Sub Entry 27 of Entry 36 of the IIIrd Schedule - Classification of goods - Ayurvedic Baby Soap - Ayurvedic Tooth Paste - Ayurvedic Mouth Wash - Baby gift pack and - Ayurvedic Baby Powder - eligibility for concessional rate of tax in terms of the newly introduced Clause 27 under Entry No. 36 of the IIIrd Schedule to the KVAT Act, 2003 - HELD THAT:- The 'Authority for Clarification' has found against the assessee on the ground that the products in question do not have therapeutic or prophylactic use and therefore they are not 'medicaments'. It is further stated that Soap, Tooth Paste and Mouth Wash are toilet articles and Baby Powder is more of a toilet article than a cosmetic. In the case of Gift Pack, it is found that the major items in the pack are taxable at 14.5% and that the pack therefore attracts tax at the same rate.
Tooth paste and tooth powder - HELD THAT:- Apex Court in SARIN CHEMICAL LABORATORY VERSUS COMMISSIONER OF SALES TAX, UP. [1970 (8) TMI 64 - SUPREME COURT] held that Tooth Paste and Tooth Powder are toilet articles and will not be Cosmetics in common parlance. In the above view of the matter, contention raised by the petitioners with regard to Tooth Paste which is one of the products, for which clarification is sought for has to fail.
Baby soap - HELD THAT:- Rule 23 of the Rules of Interpretation specifically excludes Soaps from the purview of Entry 36. In view of the fact that Soaps stand specifically excluded under Rule 23, we are not called upon to decide the question whether Baby Soap is a toilet article in common parlance or not. The clarification given in Annexure-IV order with regard to Soap also is therefore perfectly sustainable.
Mouth Wash - Gift Packs - Ayurvedic Baby Powder - HELD THAT:- The issue with regard to the exigibility of tax at concessional rates under Sub Entry 27 of Entry 36 of the IIIrd Schedule with regard to Baby Powder, Baby Gift Pack and Mouth Wash are issues which require a reconsideration and a reasoned order at the hands of the clarificatory authority.
The findings contained in Annexure A4 order of clarification with regard to Baby Soap and Tooth Paste as contained in the impugned order - With respect to other products the matter is remanded to the 'Authority for Clarification' for reconsideration and a reasoned order on the exigibility of tax to three other products, i.e., Baby Powder, Mouth Wash and Baby Gift Pack.
Suit instituted by an authorised person or not - suit disclose any cause of action or not - suit is barred by limitation or not - entitlement to a decree of declaration - entitlement to a decree of mandatory injunction - entitlement to a decree of cancellation - entitlement to a decree of permanent injunctions - entitlement to a decree for damages - entitlement to interest, if so, at what rate and for what period - HELD THAT:- It may be stated that though the suit has been pending before this Court for over three years and issues have also been framed therein and the parties relegated to evidence but the same is not a ground to put the said suit to trial, if otherwise it was found to be not maintainable. A perusal of the order sheets shows that the question of maintainability of the suit has never been gone into at any earlier point of time. Once doubts as to the maintainability of the suit have arisen, the suit cannot be permitted to pedantically proceed to trial, taking up resources of this Court which can be better utilized for other deserving cases which cannot be adjudicated without trial. Even otherwise, it is the settled law that framing of issues is not a bar to an application under Order XII Rule 6 of the CPC for decreeing the suit forthwith without any new material coming before the Court and allowed on the same record on which issues were framed.
Whether the suit on the pleas in the plaint and the documents aforesaid ought to have been entertained in the first place? - HELD THAT:- The legislature in its wisdom, while providing for creation of a juristic entity such as a company, incorporated provisions in the company law, of remedies available to the shareholders of a company in the event of oppression and mismanagement. The same was in consonance with the principles that the law having providing for management of affairs of a company by its Board of Directors or as laid down in the Articles of Association of a company, individual shareholders should not be permitted to interfere in the affairs and business of the company by filing civil suits against the company.
Once the Legislature in its wisdom has deemed it appropriate that less than the prescribed number of shareholders or shareholders holding less than the prescribed number of shares should not be permitted to initiate legal proceedings with respect to management and affairs of the company, it would be travesty of the statute to hold that less than the prescribed number of shareholders or shareholders having less than the prescribed shares, though not entitled to approach the NCLT, can interfere with the management of affairs of the company by approaching the Civil Court. The Legislature having prescribed the minimum for exercising such a right, it has to be held that less than the said minimum have no right to interfere in the management - Mention in this regard may also be made of the proviso to Section 244 of the Companies Act, 2013, which though prescribing the minimum number of shares below which NCLT cannot be approached, empowers the NCLT to waive the said qualification. 35. The counsels for the plaintiff have thus been unable to lift the doubt which had arisen during the hearing on 11th July, 2019 as to the maintainability of the suit.
The suit is dismissed with costs of ₹ 1 lacs each payable by the plaintiff to each of the two defendants.
Memorandum of understanding - 9Seeking withdrawal of application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) - appellant states that the settlement has been arrived at with the consent of other directors and the corporate debtor will honour all the cheques issued and will ensure that the payments due to the IRP are also promptly made - HELD THAT:- The appellant and respondent No. 1 admit the contents of the memorandum of understanding and the same are taken on record. The parties would be bound by the contents of this memorandum of understanding.
Keeping in view paragraph 79 of the judgment in the matter of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], exercising powers under rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we accept the memorandum of understanding and we allow the appeal and set aside the impugned order dated February 26, 2020. Respondent No. 1, original operational creditor is permitted to withdraw the application which was filed under section 9 of the IBC.
The actions taken by the IRP/RP in consequence of the impugned order are quashed and set aside - The corporate debtor is released from the rigour of law and is allowed to function independently through its board of directors - The IRP/RP will hand back the records and management of the affairs of corporate debtor, to the board of directors.
Seeking grant of Bail - Territorial Jurisdiction - HELD THAT:-This court at this stage without referring to the contents of the application and reply is of view that it has came out on record that this court does not have territorial jurisdiction to try this case, being admitted between both the parties as all the firms prosecuted in this ease have not sought any ITC within revenue district Gurugram. All the firms are registered in Delhi the court of Delhi or any other court are competent to try this case. Bur certainly not the courts of Gurugram are competent to try this case. Both the patties have also intimated this court that they also wish to pursue their effective remedy before Hon’ble High Court and Hon'ble Supreme Court of India for transfer of this case.
Keeping in view the that the accused is in jail since 07.10.2019, this court does not find it appropriate to keep the accused in jail any longer. Secondly accused Gulshan Dhingra is an old age person of more than 55 years of age and having medical history of Diabetes and Blood Pressure. Moreover there is a outbreak of Corona (Covid 19) and old persons are more prone of this virus, hence, bail application of accused Gulshan Dhingra stands allowed and accused is admitted to bail subject furnishing his bail bonds in the sum of ₹ 2 Lakhs with one surety in the like amount.
Endorsement of compliance be made on order sheet by the concerned Ahlmad within 7 days. Now, to come up on 27.03.2020, the date already fixed.
Income accrues or arises in India - contention of the assessee is that the sum would not be taxable since the shares of AIS do not derive their value substantially from asset located in India - share in a company incorporated outside India shall be deemed to be situated in India if the share or interest derives, directly or indirectly, its value "substantially" from the assets located in India - As the shares of AIS directly and indirectly derive less that 50 per cent. of their value from assets located in India, whether the income arising to the persons specified in Annexure III from the trans fer of shares in AIS to the applicant would be subject to tax in India ? - whether foreign companies cannot be assessed to tax under section 115JB of the Act? - whether Explanation 6 and Explanation 7 inserted by the Finance Act, 2015 to section 9(1)(i) of the Income-tax Act are retrospective or prospective in nature? - As the shares of AIS directly and indirectly derive less that 50 per cent. of their value from assets located in India, whether the income arising to the persons specified in Annexure III from the trans for of shares in AIS to the applicant would be subject to tax in India ? - HELD THAT:- In agreement with the view of learned authorised representative that Explanation 6 is clarificatory in nature and would apply retrospectively. Similarly, Explanation 7 inserted to address the genuine concerns of small shareholders would also apply retrospectively to give meaning in true sense and to render indirect transfer provisions contained in Explanation 5 to section 9(1)(i) of the Income-tax Act workable.
AR has indicated that as per the valuation report obtained from the independent valuer the value of shares of AIS derived directly or indirectly from assets located in India is 26.38 per cent., i. e., less than 50 per cent. In view thereof the income from transfer of shares in the hands of transferors is not subject to tax in India.
Applicants and Seowyan Investments are based in Cayman Islands with whom India does not have comprehensive DTAA. Also, in the case of Pacific Ace Development Limited, a resident of Hong Kong with whom the comprehensive DTAA came into force in respect of income derived in India with effect from April 1, 2019. AR had asserted that during the financial year 2013-14 both the foreign companies are not required to seek registration under the Companies Act, 2013, Companies Act, 1956 or any other law for the time being in force relating to companies in India.
In view of the said averments by learned authorised representative and also considering the provisions of section 115JB of the Income-tax Act, the conditions laid down in section 115JB are satisfied and there is no applicability of section 115 to the above referred foreign companies. Consequently, there is no liability, the buyer applicant is not required to withhold taxes in respect to the payment made to transferor of shares.
Revenue had questioned the valuation methodology, the Revenue may verify the computation furnished by the applicant as per rule 11UB and rule 11UC. It is reiterated that the ruling is given on matter of principle, i. e., retrospective/prospective application of Explanations 6 and 7 and based on the figures presented before us by learned authorised representative. If subsequently it is found that the figures are at variance and the actual percentage exceeds 50 per cent., the ruling would not apply and the Revenue would not be bound by such ruling. If it is found that the actual percentage is more than 50 per cent. then the Revenue may also ascertain the shareholding of each of the seller applicants at any time in 12 months preceding the date of transfer and/or the right of management or control in relation to AIS and thereafter if need be ascertain the income reasonably attributable to non-resident transferors in terms of Explanation 7(a) and 7(b) to section 9(1)(i) of the Income-tax Act. Further, if it is discovered later on that the conditions laid down in 115JB are not satisfied the transferor foreign companies would be subject to section 115JB.
Ruling :-
- Questions Nos. I and II - Explanations 6 and 7 to section 9(1)(i) of the Income-tax Act are clarificatory in nature and would apply retrospectively and therefore the incomes from transfer of shares in the hands of transferors are not subject to tax in India.
- Questions Nos. III to V - Does not arise in view of reply to I and II above
- Question No. VI - Section 115JB is not applicable to Seowyan Investments and Pacific Ace Development Limited.
- Questions No. VII - There is no liability under section 195 of the Income-tax Act of the Moody's Analytics Knowledge Services (Jersey) Limited to withhold taxes in respect to the payment made to transferor of shares.
Trial of cases relating to 'Dishonor of Cheque and default in payment after a demand notice' - Despite many changes brought through legislative amendments and various decisions of this court mandating speedy trial and disposal of these cases, the Trial Courts are filled with large number of pendency of these cases - pendency of more than 35 lakh, which constitutes more than 15 percent of the total criminal cases pending in the District Courts - HELD THAT:- A plain reading of Chapter XVII of the N.I. Act, 1881 and the judgments of this Court in Indian Bank Association & others v. Union of India and ors., [2014 (5) TMI 750 - SUPREME COURT]and Meters and Instruments Private Limited and anr. v. Kanchan Mehta, [2017 (10) TMI 218 - SUPREME COURT] would show the following mandates with regard to the expeditious trial of cases of this nature.
One of the major factor, for high pendency is delay in ensuring the presence of the accused before the Court for trial. As per recent study, more than half of the pending cases, i.e. more than 18 lakh cases, are pending due to absence of accused - Taking effect from Section 144 of the Act, Sections 62, 66 and 67 of Cr.P.C. and directions of this Court, the Magistrate may opt for one or many of the methods of service of summons, including service through speed post or the courier services, Police Officer or any other person, e-mail or through a Court having territorial jurisdiction.
There is a need to evolve a system of service/execution of process issued by the court and ensuring the presence of the accused, with the concerted efforts of all the stakeholders like Complainant, Police and Banks. One step in such direction was taken by this court in the case of Meters and Instruments Private Limited, where it had directed the banks to give the details of e-mail of the accused to the payee/complainant for service through e-mail - Banks, being an important stakeholders in cases of this nature, it is their responsibility to provide requisite details and facilitate an expeditious trial mandated by law. An information sharing mechanism may be developed where the banks share all the requisite details available of the accused, who is the account holder, with the complainant and the police for the purpose of execution of process.
The High Courts may also consider setting up of exclusive courts to deal with matters relating to Section 138, especially in establishments where the pendency is above a standard figure. Special norms for assessment of the work of exclusive courts may also be formulated giving additional weightage to disposal of case within the time-frame as per legal requirement - the status of directions issued or measures adopted by the High Courts may be assessed and a best suited mechanism in this direction may be considered.
Let the matter be registered separately as Suo Moto Writ Petition (Criminal) with the caption ‘Expeditious trial of cases under Section 138 of N.I. Act, 1881’.
Issue notice to the Union of India through Law Secretary, Registrar General of all the High Courts, the Director General of Police of all the States and Union Territories, Member Secretary of the National Legal Services Authority, Reserve Bank of India and Indian Bank Association, Mumbai as the representatives of Banking institutions - List both the matters on 16.04.2020.
Deduction u/s 80IB(10) denied - profit derived from sale of unutilized FSI not being the element of profits derived from the business activity of development and construction of the housing project relating to the sale of tenements - whether ITAT has erred in law and on facts in upholding the decision of Ld. CIT(A) in allowing the deduction u/s.80IB(10) ignoring the facts that in Pratham Residency, Pratham Vatika and Pratham Vistas, assessee has exploited the project land to the maximum keeping in view the various legal and regulatory impediments and the assessee firm had sufficient reasons for not being able to fully utilize the FSI in project? - whether only the profits which are derived from development and construction of housing units are eligible for benefit u/s.80IB(10) and not the profits which are attributable to the FSI that was sold as such without developing and constructing? - ITAT deleted the addition - HELD THAT:- Both the CIT(A) and the Tribunal have arrived at concurrent findings of fact except the project of 'Pratham Citadel'. After taking into consideration the special grounds and circumstances, the ratio of the decision in the case of Shreenath Infrastructure [2014 (4) TMI 482 - GUJARAT HIGH COURT]was applied for allowing the deduction claimed by the assessee under Section80IB(10) of the Act.
In respect of the project 'Pratham Citadel', for which, the CIT(A) disallowed the claim of the assessee under Section80IB(10) of the Act, the deduction in respect of utilization of FSI, the Tribunal has restored the matter back to the file of Assessing Officer for deciding afresh for examination and verification of the details to be furnished by the assessee so as to consider whether there is any special reasons for underutilization of FSI as enunciated in the case of Shreenath Infrastructure [2014 (4) TMI 482 - GUJARAT HIGH COURT]
When both the CIT(A) and the Tribunal have arrived at concurrent findings of fact on the basis of the material and records, none of the questions nos.2(d), (e) and (f) could be termed as substantial question of law. The appeal, therefore, fails and stands dismissed.
Interpretation of Statute - Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Land acquisition proceedings - meaning of the expression paid'/tender' in Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - non-deposit of compensation in court Under Section 31(2) of the Act of 1894 - word 'or', should be read as conjunctive or disjunctive in Section 24(2) of the Act of 2013? - true effect of the proviso, part of sub-Section (2) or main Section 24 of the Act of 2013 - mode of taking possession under the Land Acquisition Act - period covered by an interim order of a Court concerning land acquisition proceedings, to be excluded for the purpose of applicability of Section 24(2) of the Act of 2013 - revival of barred and stale claims - HELD THAT:- Section 24(2) of the Act of 2013 is a penal provision-to punish the acquiring authority for its lethargy in not taking physical possession nor paying the compensation after making the award five years or more before the commencement of the Act of 2013 in pending proceedings, providing that they would lapse. The expression where an award has been made, then the proceedings shall continue used in Section 24(1)(b) under the provisions of the Act of 1894 means that proceedings were pending in praesenti as on the date of enforcement of the Act of 2013 are not concluded proceedings, and in that context, an exception has been carved out in Section 24(2) - Even if possession has been taken, despite which payment has not been made nor deposited, (for the majority of the land-holdings), then all beneficiaries holding land on the date of notification Under Section 4 of the Act of 1894, are to be paid compensation under the provisions of the Act of 2013. Section 24 of the Act of 2013 frowns upon indolence and stupor of the authorities. The expression "possession of the land has not been taken" or "compensation has not been paid" indicates a failure on the part of the authorities to take the necessary steps for five years or more in a pending proceeding Under Section 24(1)(b). Section 24(2) starts with a non-obstante Clause overriding what is contained in Section 24(1). Thus, Section 24(2) has to be read as an exception to Section 24(1)(b).
It is apparent from a plain reading of Section 16 (of the Act of 1894) that the land vests in the Government absolutely when possession is taken after the award is passed. Clearly, there can be lapse of proceedings under the Act of 1894 only when possession is not taken. The provisions in Section 11A of the Act of 1894 states that the Collector shall make an award within a period of two years from the date of the publication of the declaration Under Section 6 and if no award is made within two years, the entire proceedings for acquisition of the land shall lapse. The period of two year excludes any period during which interim order granted by the Court was in operation. Once an award is made and possession is taken, by virtue of Section 16, land vests absolutely in the State, free from all encumbrances - Payment of compensation under the Act of 1894 is provided for by Section 31 of the Act, which is to be after passing of the award Under Section 11. The exception, is in case of urgency Under Section 17, is where it has to be tendered before taking possession. Once an award has been passed, the Collector is bound to tender the payment of compensation to the persons interested entitled to it, as found in the award and shall pay it to them unless "prevented" by the contingencies mentioned in Sub-section (2) of Section 31. Section 31(3) contains a non-obstante Clause which authorises the Collector with the sanction of the appropriate Government, in the interest of the majority, by the grant of other lands in exchange, the remission of land revenue on other lands or in such other way as may be equitable.
The legal fiction of lapsing (Under Section 24(2) of the Act of 2013) cannot be extended to denude title which has already vested in the beneficiaries of the acquisition Corporation/Local Bodies, etc., and who, in turn, have also conveyed title and transferred the land to some other persons after development. In COMMISSIONER OF SALES TAX, UP. VERSUS MODI SUGAR MILLS LTD. [1960 (10) TMI 65 - SUPREME COURT] the Court has held that "A legal fiction must be limited to the purpose for which it has been created and cannot be extended beyond its legitimate field." - This Court is of opinion that Section 24 of the Act of 2013 does not intend to take away vested rights. This is because there is no specific provision taking away or divesting title to the land, which had originally vested with the State, or divesting the title or interest of beneficiaries or third-party transferees of such land which they had lawfully acquired, through sales or transfers. There is a specific provision made for divesting, nor does the Act of 2013 by necessary intendment, imply such a drastic consequence. Divesting cannot be said to have been intended.
The present case involves placement of colon preceding to the Proviso to Section 24(2) and not Section 24(1), which ends with a full stop, and it makes sense and the true meaning where Parliament has placed it. The proviso is part of Section 24(2). It is not permissible to alter the provision and to read it as a proviso to Section 24(1)(b), mainly when it makes sense where Parliament so placed it. To read the proviso as part of Section 24(1)(b), will create repugnancy which the provisions contained in Section 24(1)(b). The window period of 5 years is provided to complete the acquisition proceedings where the award has been passed, and the provisions of the Act of 1894 shall be applied as if it has not been repealed. Section 24(2) starts with a non-obstante clause; it plainly is notwithstanding Section 24(1), and the proviso to Section 24(2) enlarges the scope of Section 24(2). When the window period has been provided Under Section 24(1)(b), i.e., Section 24(2) and its proviso, higher compensation cannot follow in case of an award which has been passed within 5 years of the enactment of the Act of 2013 otherwise anomalous results shall accrue. In case proviso is read as a part of Section 24(1)(b), it would be repugnant to the consideration of the provision which has been carved out saving acquisition and providing window period of 5 years to complete the acquisition proceedings - There is no question of outright deposit. In such event as the deposit is to be made when the Collector is prevented by the exigencies specified in Section 31(2) from making payment. The deposit is not contemplated directly either in the court or the treasury, as the case may be as provided in Section 31(2), corresponding to Section 77(2) of the Act of 2013.
The word "paid" used in Section 24(2) does not include within its meaning the word "deposited", which has been used in the proviso to Section 24(2). Section 31 of the Act of 1894, deals with the deposit as envisaged in Section 31(2) on being 'prevented' from making the payment even if the amount has been deposited in the treasury under the Rules framed Under Section 55 or under the Standing Orders, that would carry the interest as envisaged Under Section 34, but acquisition would not lapse on such deposit being made in the treasury. In case amount has been tendered and the landowner has refused to receive it, it cannot be said that the liability arising from non-payment of the amount is that of lapse of acquisition. Interest would follow in such a case also due to non-deposit of the amount. Equally, when the landowner does not accept the amount, but seeks a reference for higher compensation, there can be no question of such individual stating that he was not paid the amount (he was determined to be entitled to by the collector). In such case, the landowner would be entitled to the compensation determined by the Reference court.
The drawing of Panchnama of taking possession is the mode of taking possession in land acquisition cases, thereupon land vests in the State and any re-entry or retaining the possession thereafter is unlawful and does not inure for conferring benefits Under Section 24(2) of the Act of 2013.
The maxim actus curiae neminem gravabit is founded upon the principle due to court proceedings or acts of court, no party should suffer. If any interim orders are made during the pendency of the litigation, they are subject to the final decision in the matter. In case the matter is dismissed as without merit, the interim order is automatically dissolved. In case the matter has been filed without any merit, the maxim is attracted commodum ex injuria sua nemo habere debet, that is, convenience cannot accrue to a party from his own wrong. No person ought to have the advantage of his own wrong. In case litigation has been filed frivolously or without any basis, iniquitously in order to delay and by that it is delayed, there is no equity in favour of such a person. Such cases are required to be decided on merits.
The courts cannot invalidate acquisitions, which stood concluded. No claims in that regard can be entertained and agitated as they have not been revived. There has to be legal certainty where infrastructure has been created or has been developed partially, and investments have been made, especially when land has been acquired long back. It is the duty of the Court to preserve the legal certainty - Section 24 cannot be used to revive dead and stale claims and concluded cases. They cannot be inquired into within the purview of Section 24 of the Act of 2013. The provisions of Section 24 do not invalidate the judgments and orders of the Court, where rights and claims have been lost and negatived. There is no revival of the barred claims by operation of law. Thus, stale and dead claims cannot be permitted to be canvassed on the pretext of enactment of Section 24.
1. Under the provisions of Section 24(1)(a) in case the award is not made as on 1.1.2014 the date of commencement of Act of 2013, there is no lapse of proceedings. Compensation has to be determined under the provisions of Act of 2013.
2. In case the award has been passed within the window period of five years excluding the period covered by an interim order of the court, then proceedings shall continue as provided Under Section 24(1)(b) of the Act of 2013 under the Act of 1894 as if it has not been repealed.
3. The word 'or' used in Section 24(2) between possession and compensation has to be read as 'nor' or as 'and'. The deemed lapse of land acquisition proceedings Under Section 24(2) of the Act of 2013 takes place where due to inaction of authorities for five years or more prior to commencement of the said Act, the possession of land has not been taken nor compensation has been paid. In other words, in case possession has been taken, compensation has not been paid then there is no lapse. Similarly, if compensation has been paid, possession has not been taken then there is no lapse.
4. The expression 'paid' in the main part of Section 24(2) of the Act of 2013 does not include a deposit of compensation in court. The consequence of non-deposit is provided in proviso to Section 24(2) in case it has not been deposited with respect to majority of land holdings then all beneficiaries (landowners) as on the date of notification for land acquisition Under Section 4 of the Act of 1894 shall be entitled to compensation in accordance with the provisions of the Act of 2013. In case the obligation Under Section 31 of the Land Acquisition Act of 1894 has not been fulfilled, interest Under Section 34 of the said Act can be granted. Non-deposit of compensation (in court) does not result in the lapse of land acquisition proceedings. In case of non-deposit with respect to the majority of holdings for five years or more, compensation under the Act of 2013 has to be paid to the "landowners" as on the date of notification for land acquisition Under Section 4 of the Act of 1894.
5. In case a person has been tendered the compensation as provided Under Section 31(1) of the Act of 1894, it is not open to him to claim that acquisition has lapsed Under Section 24(2) due to non-payment or non-deposit of compensation in court. The obligation to pay is complete by tendering the amount Under Section 31(1). Land owners who had refused to accept compensation or who sought reference for higher compensation, cannot claim that the acquisition proceedings had lapsed Under Section 24(2) of the Act of 2013.
6. The proviso to Section 24(2) of the Act of 2013 is to be treated as part of Section 24(2) not part of Section 24(1)(b).
7. The mode of taking possession under the Act of 1894 and as contemplated Under Section 24(2) is by drawing of inquest report/memorandum. Once award has been passed on taking possession Under Section 16 of the Act of 1894, the land vests in State there is no divesting provided Under Section 24(2) of the Act of 2013, as once possession has been taken there is no lapse Under Section 24(2).
8. The provisions of Section 24(2) providing for a deemed lapse of proceedings are applicable in case authorities have failed due to their inaction to take possession and pay compensation for five years or more before the Act of 2013 came into force, in a proceeding for land acquisition pending with concerned authority as on 1.1.2014. The period of subsistence of interim orders passed by court has to be excluded in the computation of five years.
9. Section 24(2) of the Act of 2013 does not give rise to new cause of action to question the legality of concluded proceedings of land acquisition. Section 24 applies to a proceeding pending on the date of enforcement of the Act of 2013, i.e., 1.1.2014. It does not revive stale and time-barred claims and does not reopen concluded proceedings nor allow landowners to question the legality of mode of taking possession to reopen proceedings or mode of deposit of compensation in the treasury instead of court to invalidate acquisition.
Let the matters be placed before appropriate Bench for consideration on merits.
Calculation of refund amount - Correctness of formulae applied in calculation of the amount - total turnover considered for calculating the refund amount as per Rule 5 of the Credit Rules, whereas part of it was received in next quarter - HELD THAT:- The total turnover, as defined shall be export turnover of services or ₹ 6,40,71,967/- (plus) the value of all other services during the relevant period or nil (actual figure). Thus, the refundable amount shall be ₹ 6,40,71,967x 70,80,518/6,40,71,967 = Refund amount ₹ 70,80,518/-.
It is found that the Court has misconceived the formula by taking billing amount of export of services as the amount of total turnover or gross turnover for calculation of refund. Evidently, the formula given is for calculation of proportionate refund, where an assessee has got export turnover in part and domestic turnover in part, which is not the fact in the present case. As the appellant is exporting 100% of their services, accordingly, I hold that the appellant is entitled to refund of ₹ 70,80,518/-, whereas refund of ₹ 52,79,93/- is allowed and disbursed. I direct the Adjudicating Authority to grant the balance refund amount of ₹ 18,00,579/- within 30 days of receipt of copy of this order along with interest as per Rules.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- It is an admitted fact that a similar question in had arisen and was decided in favour of the assessee in assessee's own case for the assessment year 89, 2010-11 and 2011-12 in assessee's own case, as was noticed by the Ld. CIT(A) in the impugned order. Further the facts of this issue are covered by the decision of the Hon'ble Punjab and Haryana High Court in assessee's own case for the assessment year 2006-07 also.
In the circumstances we are of the considered opinion that the addition made by the assessing officer by invoking section 14A of the Act read with Rule 8D of the Rules cannot be sustained and the Ld. CIT(A) rightly deleted the same. No reasons to interfere with the reasoning given and conclusions reached by the Ld. CIT(A) on this aspect and therefore, the same is appended. Ground No. 1 of Revenue's appeal is, accordingly, dismissed.
Completing the book profit under section 115 JB on account of provision for gratuity, leave encashment, post-Asst. Year: 2012-13 retirement medical benefits, LTC, baggage allowance etc. - HELD THAT:- As argued before us that the provision towards meeting definite liability to be discharged on a future date in respect of the present employees and the quantification of such liability on the basis of actuarial valuation and basing on the report is ascertained liability and not covered under explanation 1 (c) of second proviso to section 115 JB of the Act is further submitted that this issue has been covered by the addition of the Hon'ble Punjab and Haryana High Court for the Assessment Year 2002-03 in assessee's own case which has been followed consistently both by the Tribunal and the Ld. CIT(A) all through these years.
There is no dispute that the decision of the Hon'ble Punjab and Haryana High Court for the Assessment Year: 2002-03 [2010 (10) TMI 1022 - ITAT DELHI] in assessee's own case covers this issue and such view of the Hon'ble High Court has consistently been followed by the Tribunal and the Ld. CIT(A). Unless and until there is change of circumstances, is not possible to take a different view on an issue covered by the decision of the Hon'ble High Court and also the Tribunal for earlier years.
Computing book profits under section 115 JB of the Act on account of amortisation of leasehold land - There is no dispute that the decision of the Hon'ble Punjab and Haryana High Court for the Assessment Year: 2002-03 in assessee's own case covers this issue and such view of the Hon'ble High Court has consistently been followed by the Tribunal and the Ld. CIT(A). Unless and until there is change of circumstances, is not possible to take a different view on an issue covered by the decision of the Hon'ble High Court and also the Tribunal for earlier years.
Disallowance in computing book profits under section 115 JB of the Act on account of amortisation of leasehold land - Assessing Officer disallowed the same stating that no rate of depreciation was prescribed either in the companies act or in the Income Tax Act, 1961 in respect of land - HELD THAT:- The submissions made before us could not be contradicted by the Revenue and more particularly the fact that this issue has been covered by the addition of the Hon'ble Punjab and Haryana High Court in assessee's own case for the Assessment Year: 2006-07 [2018 (4) TMI 47 - PUNJAB AND HARYANA HIGH COURT] in ITA No. 136/2015 by order dated 28/02/2018. Further it is also not in dispute that a view in consonance with the decision of the Hon'ble High Court has been taken by the Tribunal for the Assessment Years: 2004-05 to 2011-12.
Eligible for deduction under section 80 IA only from adopted from generation and distribution of power and not from other income - HELD THAT:- CIT(A) followed the decision of the Tribunal and granted relief to the assessee. Assessee further places reliance on the addition of the Hon'ble Delhi High Court in the case of Pr. CIT vs. Bharat Sanchar Nigam [2016 (8) TMI 270 - DELHI HIGH COURT].
Disallowance of depreciation claimed by the assessee in respect of Teesta-V power station - HELD THAT:- DR submitted that remanding the issue to the file of the learned Assessing Officer to follow the decision of the Hon'ble Noida Medicare Centre limited [2015 (8) TMI 665 - DELHI HIGH COURT] would meet the ends of Justice. Recording the same we set aside the finding of the Ld. CIT(A) on this issue and remit the same to the file of the assessing officer to take a view in the light of the decision of the Hon'ble Apex Court in the case of Noida Medicare Centre limited (supra).
Addition on account of income tax on perquisite borne by the assessee in respect of accommodation provided to its employees while computing the book profit under section 115 JB - HELD THAT:- Considering the fact that under identical facts and circumstances the Tribunal had taken a view in favour of the Asst. Year: 2012-13 assessee in assessee's own case for the Assessment Year: 2010-11 and 2011-12 while following the decision of the Mumbai Tribunal in the case of Rashtriya Chemicals and Fertilisers limited [2018 (3) TMI 1564 - ITAT MUMBAI] in the absence of any decision to the contrary by any higher forum, we hold the issue in favour of the assessee and direct the deletion of the addition made by the learned Assessing Officer on account of income tax on perquisite borne by the assessee in respect of accommodation provided to its employees while computing the book profit under section 115 JB of the Act.
The Supreme Court dismissed SLP(C) No.5239/2019 due to low tax effect. Pending applications were disposed of. SLP(C) No.2297/2018 was listed after Holi Vacation.
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