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2020 (4) TMI 895 - SUPREME COURT
Enforceability of the foreign award - Compliance with the contractual obligation to export groundnut due to the Government's refusal or not on the part of NAFED - whether NAFED could have been held liable in breach of contract to pay damages particularly in view of Clause 14 of the Agreement? - whether enforcement of the award is against the public policy of India?
HELD THAT:- In the present case, parties have agreed, and in Clause 14 of the Agreement, it was contemplated that during the contract if there is any prohibition of the export or any other executive or legislative Act by or on behalf the Government of the Country of origin, the unfulfilled part of the contract shall be cancelled. Because of the refusal by the Government, it was not permissible to the NAFED to make a supply to the Alimenta S.A. Hence; the unfulfilled part was required to be cancelled. Thus, NAFED was justified in not making the supply as it would have violated the Export Control Order, and it was not permissible to carry forward the quantity of the previous year to the next year because of the Export Control Order without permission of the Government.
In the present case, because of the clear stipulation in Clause 14 of the Agreement, it is apparent that the parties have agreed for a contingent contract. They knew very well that the Government's executive, or legislative actions might come in the way as provided in Clause 14 of the Agreement. Thus, in this case, Section 32 of the Contract Act is attracted and not the provisions of Section 56. It was an agreement to do an act impossible in itself without permission, and that is declared to be void by Section 32. The contract was capable of being performed in case the Government gave the requisite authorization - Section 56 is not attracted as the promisor and promisee both knew the reason in advance as in agreement such a contingency was provided itself in case of Government's executive order comes in the way, for cancellation of the contract. Thus, the contract became void on the happening of the contingency, as provided in Section 32 of the Contract Act.
This Court in SATYABRATA GHOSE VERSUS MUGNEERAM BANGUR & CO. [1953 (11) TMI 19 - SUPREME COURT], considered the applicability of Sections 32 and 56 while considering the doctrine of frustration of contract. Impossibility and frustration are used as interchangeable expressions. The principle of frustration is an aspect of the discharge of a contract. In India, the only doctrine the courts have to go by is that of intervening impossibility or illegality as laid down in Section 56, and the English decisions in this regard may have persuasive value but are not binding. This Court also considered if the contract contained impliedly or expressly a stipulation, according to which it would stand discharged on happening of particular circumstances. The dissolution of the agreement would take place under the terms of the contract itself. Such cases would be outside the purview of Section 56 of the Contract Act altogether.
The Court followed the decision in Satyabrata Ghose in NAIHATI JUTE MILLS LTD. VERSUS KHYALIRAM JAGANNATH [1967 (10) TMI 66 - SUPREME COURT], it held that if the contract contains implied or expressly a term according to which it would stand discharged on the happening of certain contingencies, dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of Section 56 of the Contract Act. Such cases have to be dealt with Under Section 32 of the Contract Act.
It is also apparent that the Government rightly objected to the supply being made at the rate of the previous season in the next season, particularly when the prices escalated thrice. The addendum was entered into subsequently, unfairly, and the parties fully understood that the Government would not permit export at the rate on which supply was proposed, and NAFED was acting only as a canalising agent of the Government of India. Thus, for such an unfair contract, permission was rightly declined by the Government. In the previous year, the commodity could not be supplied due to force majeure. In no event, supply could have been made in December 1980 and January 1981 sans permission from the Government of India.
Whether the ground of prohibition to supply imposed by the Government was sufficient to render the award unenforceable in terms of the provisions contained in Section 7 of the Foreign Awards Act? - HELD THAT:- It is provided in Section 7(1) (b)(ii) that if the court dealing with the case is satisfied that the enforcement of the award will be contrary to public policy, the foreign award may not be enforced. The foreign award may also not be executed in the case as per Section 7(1)(a)(i) if the parties to the agreement under the law applicable are under some incapacity or agreement is not valid under the law. Similar exigency is provided in Section 7(1)(a)(ii) if proper notice of appointment of Arbitrator is not given or the party was unable to present its case. Section 7(1)(a)(iii) provides that if the award deals with the questions not referred or contains decisions on matters beyond the scope of the agreement renders award unenforceable. Section 7(1)(a)(iv) makes an award not capable of enforcement in case the composition of the Arbitration Tribunal or procedure is not in accordance with the agreement of the parties.
When the award can be said to be contrary to public policy? - HELD THAT:- This Court considered the issue in several decisions. The expression "public policy" concerning the agreement relates to the public policy of the country where award is being enforced. Section 23 of the Contract Act, 1872 deals with what consideration and objects are lawful and what not. If the court regards it as immoral or opposed to public policy, in that event, the consideration or object of agreement is said to be unlawful, and any agreement of which the object or consideration is unlawful is void - It is apparent from various decisions as to enforceability of foreign awards, Clause 14 of FOSFA Agreement and as per the law applicable in India, no export could have taken place without the permission of the Government, and the NAFED was unable to supply, as it did not have any permission in the season 1980-81 to effect the supply, it required the permission of the Government. The matter is such which pertains to the fundamental policy of India and parties were aware of it, and contracted that in such an exigency as provided in Clause 14, the Agreement shall be cancelled for the supply which could not be made. It became void Under Section 32 of the Contract Act on happening of contingency.
The Arbitrator appeared at the appellate stage, though, as per the Indian Law and the ethical standards, the Arbitrator could not have appeared at the second stage to defend arbitration award passed by him, and should have kept aloof. However, no concrete material has been placed on record to substantiate the objection as to prevailing practice and law in U.K. at the relevant time. Hence, we are not inclined to decide the issue in this case. Suffice it to observe that Arbitrator is supposed to follow ethical standards, and, in our considered view, ought not to have defended arbitration award passed by him in the subsequent judicial proceedings.
The award is ex facie illegal, and in contravention of fundamental law, no export without permission of the Government was permissible and without the consent of the Government quota could not have been forwarded to next season. The export without permission would have violated the law, thus, enforcement of such award would be violative of the public policy of India - On the happening of contingency agreed to by the parties in Clause 14 of the FOSFA Agreement the contract was rendered unenforceable Under Section 32 of the Contract Act. As such the NAFED could not have been held liable to pay damages under foreign award.
The appeal filed by the NAFED is thus allowed - the impugned judgment and order passed by the High Court is set aside. Award is held to be unenforceable.
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2020 (4) TMI 894 - ITAT MUMBAI
Unexplained cash credit - bogus LTCG - addition u/s 68 - Penny stock purchases - as argued assessee was not provided the cross examination of those parties who gave statements against the assessee and also that materials used against the assessee in framing the assessment order were not provided to the assessee - HELD THAT:- Assessee held these shares for more than 12 months and all these transactions were routed through the banking channels. Thereafter, the investigation wing of the department conducted the investigation and searches on various operators in Kolkata and elsewhere and a racket of shares manipulation came to notice of the department. In the said racket the shares were purchased at a very minimal price and after certain period sold at a very astronomical price which is manifold the purchase price.
In the whole racket which was found that the various investors were indulged in these transactions in order to book the bogus long term capital gain/short term capital gain and routed their own money in order to convert the same into the long term capital gain - these penny stock companies were not having any financial strength or genuine business and the increase in the prices of the share was only through manipulation and connivance with the brokers. The assessee’s name was found to be in the list of beneficiary and accordingly the AO inquired upon these transactions by the assessee during the year.
Assessee has duly disclosed these long term capital gains in his return of income filed for the year. We note that the AO has not supplied any material to the assessee before finalizing the assessment and has merely relied upon the investigation report received by the assessee that assessee is a beneficiary of this racket. The AO merely reproduced the report of the investigation wing in the assessment order and discussed the financial of Premier Capital Services Ltd. However, it was never confronted to the assessee or any cross examination was allowed to find out the truth behind it. We note that assessee has purchased the shares and subsequently sold on the stock exchange through online trading portal and where it is very difficult to note about the subsequent buyer
Assessee has filed all the necessary evidences as stated above before the AO as well as before the Ld. CIT(A). However, no further enquiry was carried out by the AO or by Ld. CIT(A) but merely relied on the report of the investigation wing and statements of certain individuals recorded during the course of search who have stated that they were engaged in providing accommodation entries for LTCG/LTCL in various shares which are called penny stocks. However, these information were never provided to the assessee. Similarly, no cross examination was allowed by the AO to the assessee during the assessment proceedings - AO has merely relied on the investigation report and did not try to collect further evidences by conducting further investigation to prove that the assessee own funds have changed hands.. Under these circumstances, we are not in a position to subscribe to the conclusion by the authorities below - We direct the AO to delete the addition under section 68 - Decided in favour of assessee.
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2020 (4) TMI 893 - DELHI HIGH COURT
Money Laundering - Seeking grant of Interim Bail - COVID-19 outbreak situation - likelihood of the petitioner being affected by Covid-19 - over-crowding in jail - HELD THAT:- A status report has been filed by the Superintendent, Prisons (Headquarters), indicating the steps taken for reducing the over-crowding in the jail and the further steps which are likely to be taken. Be that as it may, petitioner in his Cell is in isolation and thus, is maintaining social distancing. Even if the petitioner has to use common facilities like rest room and taking food, the distancing can still be maintained besides maintaining hygiene by use of adequate measure including washing hands etc. to which the petitioner does not state that there is any inadequacy.
The second ground urged by the petitioner is that in case, interim bail is granted to him, he would be of help to the society in view of his expertise in the Healthcare sector. Before filing the present petition, the petitioner has filed writ petition before the Hon'ble Supreme Court wherein, the Hon'ble Supreme Court has directed that the suggestions given by the petitioner be considered by the concerned authorities.
The petitioner is allegedly involved in offence punishable with more than 7 years of sentence and in more than one case and that too under PMLA and hence does not qualify to be released pursuant to directions of the High Powered Committee - petition dismissed.
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2020 (4) TMI 892 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH-II
Replacement of IRP with RP - seeking approval for replacing Mr Hemant Shah, Interim Resolution Professional (IRP), with Mr Saurabh Tikmani as Resolution Professional (RP) of the Corporate Debtor - sections 22(2) and 22(3)(b) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The first meeting of the CoC was held on 16.01.2020, at which it was resolved to appoint Mr Saurabh Tikmani (Reg. No.IBBI/IPA001/IP-P00559/2017-18/10989) as the RP of the Corporate Debtor in place of Mr Harshul Anilkant Shah, IRP. The voting result has been placed at p.47 of the Interlocutory Application. Mr Saurabh Tikmani has also filed his written consent in Form AA to act as RP of the Corporate Debtor, which has been placed on record at p.48 of the Application. There are no circumstances that inhibit the appointment of Mr Saurabh Tikmani as such RP.
This Bench after duly considering the facts and circumstances mentioned in the interlocutory application and the submissions made by the learned counsel for the Applicant/ RP at the time of hearing held on 28.02.2020, hereby grants approval for the appointment of Mr Saurabh Tikmani [Reg. No.IBBI/IPA-001/IPP00559/2017-18/10989] as the RP of Tribhovandas Bhimji Zaveri & Sons Retail Private Limited [CIN: U74999MH2015PTC263038], the Corporate Debtor.
Application disposed off.
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2020 (4) TMI 891 - SUPREME COURT
Seeking release of shop by Landlord - service of notice - after purchase of the said shop, the Appellant requested the Respondent to vacate the shop, to which the Respondent initially agreed but later refused to vacate - case of the Respondent (tenant) is that there was no notice issued by the Appellant (landlord) to the Respondent (tenant), mandatorily required under Section 21(1)(a) of the Rent Control Act - HELD THAT:- The primary reason for allowing the Writ Petition was that there could be no presumption of service of notice as required under the Proviso to Section 21(1)(a) of the Rent Control Act. The finding of the fact with regard to comparative hardship of the landlord being higher than that of the tenant, as recorded by the Prescribed Authority and the Appellate Authority, has not been disturbed by the High Court, except for a mere mention in passing in the later part of the judgment, which cannot be considered to have upset the finding of fact with regard to comparative hardship, as recorded by the Authorities.
From Section 21(1)(a) of the Rent Control Act, it is clear that no particular mode of giving notice by the landlord to the tenant has been provided for, meaning thereby that the same could be given orally or in writing; and if in writing, it is not necessary that it should be sent only by registered post. What is required is that "the landlord has given a notice in that behalf to the tenant".
Thus, it is clear that evidence adduced on affidavit was admissible before the Prescribed Authority. In the facts of the present case, when the Appellant (landlord) had filed the photocopy of the receipt of having sent the notice under certificate of posting, along with an affidavit, which was accepted by the Prescribed Authority, and coupled with the attending circumstances as noticed by the Prescribed Authority, a specific finding of fact was recorded that due notice, as required Under Section 21 of the Rent Control Act, had been sent by the Appellant (landlord) and received by the Respondent (tenant), which is fully justified in law.
The judgment of the Writ Court is set aside and the release application of the Appellant (landlord), which was allowed by the Prescribed Authority, and affirmed by the Appellate Authority, stands affirmed - application allowed.
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2020 (4) TMI 890 - SUPREME COURT
Striking a legal balance between the State-citizen intercourse in the context of relationship of an employer and employee - Compulsory retirement of the Appellant - seeking reinstatement of the Appellant back in service - sexual harassment in the workplace - inducing to join sex racket running inside the organisation - HELD THAT:- It is not in dispute that the Petitioner's complaints of sexual harassment were met with incidents showcasing procedural ignorance and casual attitude of her seniors in the department. As regards the press note dated 19.8.2008, this Court had taken strong exception to the unwarranted attacks on her psychological status and quashed the note in its entirety vide order dated 15.12.2014 for being violative of the Petitioner's dignity, reputation and privacy. Despite such terse finding regarding violation of fundamental rights, no relief of compensation was given to the Petitioner and presumably not pursued by her at that time.
The scheme of the 2013 Act, Vishaka Guidelines and Convention on Elimination of All Forms of Discrimination Against Women (CEDAW) predicates that a non-hostile working environment is the basic limb of a dignified employment. The approach of law as regards the cases of sexual harassment at workplace is not confined to cases of actual commission of acts of harassment, but also covers situations wherein the woman employee is subjected to prejudice, hostility, discriminatory attitude and humiliation in day to day functioning at the workplace. Taking any other view would defeat the purpose of the law. A priori, when inaction or procrastination (intentionally or otherwise) is meted out in response to the attempt of setting the legal machinery in motion, what is put to peril is not just the individual cries for the assistance of law but also the foundational tenets of a society governed by the Rule of law, thereby threatening the larger public interests - To wit, time taken to process the stated complaint and improper constitution of the first Complaints Committee (intended or unintended) in violation of the Vishaka Guidelines, constitute an appalling conglomeration of undignified treatment and violation of the fundamental rights of the Petitioner, more particularly Articles 14 and 21 of the Constitution.
In the present case, the Petitioner had faced exceedingly insensitive and undignified circumstances due to improper handling of her complaint of sexual harassment. Regardless of the outcome of the inquiry into the stated complaint, the fundamental rights of the Petitioner had been clearly impinged. Taking overall view of the circumstances - this is a fit case to award compensation to the Petitioner for the stated violation of her right to life and dignity, quantified at ₹ 1,00,000/- - Had it been a case of allegations in the stated complaint of the Petitioner been substantiated in the duly conducted inquiry (which the Petitioner had failed to do), it would have been still worst and accentuated violation of her fundamental rights warranting suitable (higher) compensation amount.
Petition disposed off with following directions:
(i) We hold that Rule 135 of the 1975 Rules is valid and does not suffer from the vice of unconstitutionality. Further, the expression "may" occurring in Sub-rule (2) of Rule 135 must be read as "shall", for giving true effect to the object of the provision.
(ii) The impugned order of compulsory retirement passed Under Rule 135 against the Appellant/Petitioner is valid and legal and the decision of the High Court in this regard stands confirmed subject, however, to modification thereof to the extent indicated in the present judgment.
(iii) The grant of pension to the Appellant/Petitioner herein shall be computed in accordance with the date of notional superannuation as directed by the High Court and not from the date of actual compulsory retirement and additional sum in that regard, if any, be paid to her within six weeks from today.
(iv) The Respondent(s) (Union of India) is directed to pay compensation quantified at ₹ 1,00,000/- (Rupees one lakh only) to the Appellant/Petitioner herein for violation of her fundamental rights to life and dignity-as a result of the improper handling of her complaint of sexual harassment. The compensation amount be paid to the Appellant/Petitioner by way of direct transfer in her bank account or be deposited in this Court and in either case, within six weeks from today.
(v) The Appellant/Petitioner is granted time to vacate and hand over peaceful possession of her official quarter for a period of three months from today. Further, no penal house rent charges be levied or recovered from the Petitioner up to next three months from today.
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2020 (4) TMI 889 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT-A sustained 12.5% disallowance - HELD THAT:- In this case the sales have not been doubted it is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from decision in the case of Nikunj eximp enterprises [2014 (7) TMI 559 - BOMBAY HIGH COURT]
In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However, the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer - in the absence of any enquiry by the AO from the alleged bogus supplies in my considered opinion on the facts and circumstances of the case the 2% disallowance out of the bogus purchases meets the end of justice. Accordingly, direct that disallowance be restricted @ 2% of the bogus purchase - Appeal filed by the assessee stands partly allowed.
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2020 (4) TMI 888 - SUPREME COURT
Seeking permission for the petitioners’ advocate to remain present during interrogation at a visible distance but not audible distance - HELD THAT:- The learned Additional Solicitor General for the respondent-UOI has no objection.
The writ petitions stand disposed of.
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2020 (4) TMI 887 - ANDHRA PRADESH HIGH COURT
Maintainability of appeal - requirement to comply with the pre-deposit - demand of 12.5 per cent of the disputed tax - HELD THAT:- Division Bench of this court in the case of SRI HARI MAHARALAYAM COMPANY VERSUS COMMERCIAL TAX OFFICER, LALAPETA CIRCLE AND OTHERS [2019 (9) TMI 1550 - ANDHRA PRADESH HIGH COURT] while mentioning that the pre-deposit of part of the disputed tax is required only when the appeal is filed against the assessment order, and since no tax is quantified under the endorsement, held that the insistence of the authorities to pay 12.5 per cent of the disputed tax as a condition precedent for entertaining the appeal against the endorsement is untenable.
The second respondent is directed to entertain the appeal of the petitioner against the endorsement of the first respondent, without insisting for payment of 12.5 per cent of disputed tax - petition allowed.
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2020 (4) TMI 886 - SUPREME COURT
Terrorist activities - bomb was planted but was subsequently diffused - reliance placed on confession of the Appellant for his conviction - confession is substantive piece of evidence or not - voluntary and truthful confession or not - admissible evidence or not.
Whether the Appellant has made the confession (Ex. P-57) voluntarily and truthfully? - HELD THAT:- The law of confession is embodied in Sections 24 to 30 of the Indian Evidence Act, 1872. The confession is a form of admission consisting of direct acknowledgment of guilt in a criminal charge. In this connection, it is relevant to notice the observations of Privy Council in PAKALA NARAYANA SWAMI VERSUS EMPEROR [1939 (1) TMI 13 - BEFORE THE PRIVY COUNCIL] where it was held that a confession must either admit in terms of an offence, or at any rate substantially all the fact which constitute the offence. An admission of a gravely incriminating fact, even a conclusively incriminating fact is not by itself a confession.
It is well-settled that a confession which is not free from doubt about its voluntariness, is not admissible in evidence. A confession caused by inducement, threat or promise cannot be termed as voluntary confession. Whether a confession is voluntary or not is essentially a question of fact.
In the instant case, it is evident that from out of the questions put by PW-28 and the answers elicited and the manner in which the Accused has made the statement are all the foundations upon which it is to be found out as to whether the statement was made voluntarily or not. If the certificate is not supported by any of the above inputs, then the certificate needs to be rejected. The police officer cannot record such a certificate out of his own imagination and the entire proceedings should reflect that the certificate was rightly given based on the materials - In the present case, there is nothing on record to prove the voluntariness of the statement. Ex. D-1 and D-2 and other circumstances would go to show that the Appellant could not have made the statement voluntarily. Therefore, the confession statement of the Appellant requires to be rejected.
Whether the statement of two other co-Accused is admissible in evidence? - HELD THAT:- In the instant case, no doubt, the Appellant was absconding. That is why, joint trial of the Appellant with the other two Accused persons could not be held. As noticed above, Section 15 of the TADA Act specifically provides that the confession recorded shall be admissible in trial of a co-Accused for offence committed and tried in the same case together with the Accused who makes the confession - if for any reason, a joint trial is not held, the confession of a co-Accused cannot be held to be admissible in evidence against another Accused who would face trial at a later point of time in the same case. We are of the further opinion that if we are to accept the argument of the learned Counsel for the Respondent-State, it is as good as re-writing the scope of Section 15 of the TADA Act as amended in the year 1993.
Since the trial of the other two Accused persons was separate, their confession statements are not admissible in evidence and the same cannot be taken as evidence against the Appellant - the Designated Court was not justified in convicting the Appellant - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 885 - SC ORDER
Doctrine of Promissory Estoppel - withdrawal of scheme for revival of economy in Kutch District - Withdrawal of the benefit/incentive scheme to the original writ petitioners - retrospective or retroactive? - effect of subsequent N/N. 16/2008 dated 27.03.2008 - It was the case of the original writ petitioners that the subsequent notification No. 16/2008-CE changed the entire basis of the incentive exemption and had the effect of substantially reducing their entitlement of refund. It was also the case on behalf of the original writ petitioners that as a result of the said amendment which resulted in their entitlement for refund being reduced from nearly 100% of the duty paid to only 34% of such duty amount.
HELD THAT:- For the rest of the matters, leave is granted in the Special Leave Petitions and matters extracted.
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2020 (4) TMI 884 - TELANGANA HIGH COURT
Maintainability of petition - Disputed questions of facts present or not - time limitation - Locus of the 2nd petitioner to claim the amounts due to the 1st petitioner - Distribution of the liability between the new State of Telangana and the residuary State of Andhra Pradesh.
Whether the existence of alternative remedy by way of a Civil Suit is a bar to entertaining the Writ Petition? - HELD THAT:- Such power is to be exercised in exceptional circumstances where the High Court finds that the action of the State or its instrumentality is arbitrary and unreasonable and as such violative of Article 14 of the Constitution of India.
Whether really there are any disputed questions of fact warranting dismissal of the Writ Petition, in the instant case? - HELD THAT:- The plea about there being disputed questions of fact arising for consideration in the Writ Petition is mala fide intended only to drive the petitioners to the lengthy, dilatory and expensive process by a Civil Suit.
Plea of bar of Limitation - HELD THAT:- Te plea of the respondents that the claims of the petitioners for performing Cloud Seeding operations for the years 2007, 2008 and 2009 is barred by limitation, is without any merit.
Locus of the 2nd petitioner to claim the amounts due to the 1st petitioner - Firm - HELD THAT:- In view of the clear provision in Section 47 of the Indian Partnership Act, 1932, the payments due to the 1st petitioner-Firm can certainly be made to the 2nd petitioner and such payments would bind the 1st petitioner as well.
Distribution of the liability between the new State of Telangana and the residuary State of Andhra Pradesh - HELD THAT:- According to Clause (b) of sub-section (1) of Section 60, the liability has to be apportioned between the new State of Telangana and the residuary State of Andhra Pradesh in the ratio 41.68 : 58.32, i.e., the liability of the State of Telangana (respondent No. 1) would be 41.68 % of the total liability and the liability of the State of Andhra Pradesh (respondent No. 2) would be 58.32% of the total liability.
The Writ Petition is allowed with costs of ₹ 25,000/- and respondent Nos. 1 and 2 are directed to pay in three (03) months the arrears of dues under the Cloud Seeding contracts dt. 04.07.2007, 25.07.2008 and 20.07.2009 amounting to ₹ 40,28,47,380 with interest thereon from the respective due dates of payment till the date of actual payment at the rate of 9% per annum; and both the liability towards costs and the arrears are apportioned between the respondent Nos. 1 and 2 in the ratio 41.32 : 58.68 respectively.
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2020 (4) TMI 883 - ITAT BENGALURU
TP Adjustment - comparable selection - HELD THAT:- Referring to software development service provided by assessee companies functionally dissimilar with that of assessee need to be deselected from final list of comparability.
TPO applied filter of more than ₹ 1 crore - We direct Ld. AO/TPO to exclude Tata Elxi Ltd (Seg.), Mindtree Ltd., Larsen and Toubro Infotech Ltd., RS Software (India) Ltd., Persistent Systems Ltd., Nihilent Technologies Ltd., Infosys Ltd., Cybage software Pvt.Ltd. for having high turnover as compared to a captive service provider like assessee.
Rheal Software Pvt.Ltd. - No clear picture of activity performed by this company under software development service. Admittedly, there is a trend of diminishing revenue from financial year 2010-11 to financial year 2014-15 for which, reason is not known from details available and placed on record. In our view this diminishing revenue should have further triggered investigation by Ld. AO/TPO. set aside comparable back to Ld.AO/TPO to call for information is from this company under section 133 (6) to understand the reasoning behind the fall in revenue. In the event, diminishing revenue indicates the level of risk undertaken by this company which cannot be compared with absolutely no risk company like assessee, the same should be excluded.
Aspire Systems (India) Pvt.Ltd. - Authorities below has not verified the statistics advanced by Ld.AR in respect of the percentage of related party sales this company had, it would be just and proper to direct Ld.AO/TPO to examine submissions advanced in this regard. We also direct that if RPT is found to be more than 15% of the total revenues, then this comparable should be excluded from the finalist. Accordingly we set aside this comparable back to Ld.AO/TPO
Infobeans Technologies Ltd. - As the annual report of this company categorises the diversify services provided by this company under software development segment. We also note that this company is basically into application development for web and mobile and provides customised services to its offshore clients comprising. Entire revenue received by this comparable ease under one single segment of sale of software. This company also owns software licenses - this comparable cannot be considered to be functioning in 100% risk mitigated environment and is a full-fledged enterprise. Such a comparable cannot be compared with a captive service provider like assessee. Accordingly we direct this comparable to be excluded from finalist
Inteq Software Pvt. Ltd - As noted that DRP did not verified this aspect having regard to the annual report filed by assessee. In fact DRP notes that this company fulfils RPT filter adopted by Ld.TPO. We refer to our observations while deciding the comparability of aspire systems (India) private limited in preceding paragraphs. Applying the same observation mutatis mutandis in the present comparable, we direct Ld. AO/TPO to verify the RPT filter having regard to the annual report. We also direct that if RPT is found to be more than 15% of the total revenues, then this comparable should be excluded from the finalist. Accordingly we set aside this comparable back to Ld.AO/TPO.
Functional similarities test - Set aside this issue back to Ld.AO/TPO for reconsideration of Sankhya Infotech, Athena Global Technologies, Evoke Technologies Pvt.Ltd., Harbinger Systems Pvt.Ltd., Isummation Technologies Pvt.Ltd and Maveric Systems Ltd.
Sales and Marketing Support service segment - Ugam Solutions Pvt.Ltd is into managed analytical services and provides solutions to global market research firms, retailers, leading brands as has been observed by DRP in para 8.2.1. A fit comparable the functions rendered by assessee to the associated enterprise this company cannot be a fit comparable due to functional dissimilarities and risk assumed by this company. Accordingly we direct this comparable to be excluded from the final list.
Axience Consulting Pvt.Ltd. is in financial analysis and research, business intelligence, business and market research, strategic human capital services as recorded by DRP in para 8.3.1. Further we also note page 1428 that there is no segmental details available in respect of revenues earned under each segment. Annual report at page 1431 records that this company is knowledge solution business intelligence and consulting firm providing high-quality solutions. In our considered opinion functions performed by this company cannot be compared with Ltd back-office support provided by assessee to its associated enterprises under sales and marketing segment. Thus excluded from final list.
Platinum Advertising Pvt. Ltd. - As authorities below has summarily included this comparable without analysing the functional profile assets owned and risks assumed by this comparable having any similarity with assessee before us. We accordingly direct Ld.AO to carry out FAR analysis having regard to the annual report available on public domain. In the event further information is required Ld.AO/TPO shall call for it under section 133 (6) of the act. Needless to say that proper opportunity of being heard shall be granted to assessee as per law.Accordingly this comparable is set aside to Ld.AO/TPO for verification afresh.
Priya International Ltd (Seg) - As both sides submitted that DRP in its order has some really rejected the comparables without considering the submissions advanced by assessee. Thus we set aside this issue back to Ld.AO/TPO for reconsideration of Priya International Ltd (Seg.)
Adjustment of notional interest on outstanding receivables - HELD THAT:- This Bench referred to decision of Instrumentation Corpn. Ltd. [2016 (7) TMI 760 - ITAT KOLKATA] held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act. We also perused decision relied upon by Ld.AR. In our considered opinion, these are factually distinguishable and thus, we reject argument advanced by Ld.AR.
Alternatively, argued that in TNMM, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and lones and advances to associated enterprise would amount to double taxation - as relying on ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD. VERSUS DCIT, CIRCLE-3, GURGAON [2018 (2) TMI 1151 - ITAT DELHI] e deem it appropriate to set aside this issue to Ld.AO/TPO for deciding it in conformity with the above referred judgment. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in accordance with law.
Disallowance towards service tax paid on expenses - HELD THAT:-We note that expenditure was incurred but could not be adjusted against input credit which was subsequently written off as part of business expenditure. It has been submitted that assessee has received refund in subsequent year and offered the same to tax in the relevant year. We direct Ld.AO to verify these details and consider the claim of assessee in accordance with law.
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2020 (4) TMI 882 - SUPREME COURT
As per N. V. RAMANA
Deemed University - public servant - contention of the respondent is that the term “University” needs to be read in accordance with the UGC Act, wherein only those Universities covered under the Section 2(f) of the UGC Act are covered under the PC Act - whether the respondent who is allegedly a trustee in the Sumandeep Charitable Trust which established and sponsors the said University (Deemed to be University) is a 'public servant’ covered under Section 2(c) of the PC Act? - HELD THAT:- On a perusal of Section 2(c) of the PC Act, it is observed that the emphasis is not on the position held by an individual, rather, it is on the public duty performed by him/her. In this regard, the legislative intention was to not provide an exhaustive list of authorities which are covered, rather a general definition of ‘public servant’ is provided thereunder. This provides an important internal evidence as to the definition of the term “University”.On a perusal of Section 2(c) of the PC Act, we may observe that the emphasis is not on the position held by an individual, rather, it is on the public duty performed by him/her. In this regard, the legislative intention was to not provide an exhaustive list of authorities which are covered, rather a general definition of ‘public servant’ is provided thereunder. This provides an important internal evidence as to the definition of the term “University”.
The object of the PC Act was not only to prevent the social evil of bribery and corruption, but also to make the same applicable to individuals who might conventionally not be considered public servants. The purpose under the PC Act was to shift focus from those who are traditionally called public officials, to those individuals who perform public duties. Keeping the same in mind, as rightly submitted by the learned senior counsel for the appellantState, it cannot be stated that a “Deemed University” and the officials therein, perform any less or any different a public duty, than those performed by a University simpliciter, and the officials therein - the High Court was incorrect in holding that a “Deemed University” is excluded from the ambit of the term “University” under Section 2(c)(xi) of the PC Act.
Whether the appellant-trustee in the Board of ‘Deemed to be University’ is a ‘public servant’ covered under Section 2(c) of the PC Act? - HELD THAT:- This Court in the case of CENTRAL BUREAU OF INVESTIGATION, BANK SECURITIES AND FRAUD CELL AND ORS. VERSUS RAMESH GELLI AND ORS. [2016 (2) TMI 1296 - SUPREME COURT], dealt with the question as to whether Chairman, Directors and officers of a private bank before its amalgamation with a public sector bank, can be classified as public servants for prosecution under the PC Act.
This case is not an appropriate one to have exercised the power under Section 227 to discharge the accused-respondent herein, having regards to the facts and circumstances of the case. However, it should be noted that this judgment is rendered for a limited purpose, and we have not expressed any opinion on the merits of the case. The trial court is directed to proceed with the case expeditiously.
As per Ajay Rastogi, J.
Whether the respondent-trustee in the board of ‘deemed to be university’ is a ‘public servant’ covered under Section 2(c) (xi) of the Prevention of Corruption Act, 1988? - HELD THAT:- By introduction of Section 2(c )(xi) of the Act, 1988, any person or member of any governing body with whatever designation called of any university has been included in the definition of “public servant” and any university includes all universities regardless of the fact whether it has been established under the statute or declared deemed to be university under Section 3 of the UGC Act. It is true that the distinction has been pointed out by the Parliament under the provisions of the UGC Act for consideration and determination of standards of education in universities, but in my view, no distinction could be carved out between the university and deemed to be university so far it relates to the term ‘public servant’ as defined under Section 2(c ) (xi) of the Act 1988 - In construing the definition of ‘public servant’ in clause (c ) of Section 2 of the Act 1988, the Court is required to adopt an approach as would give effect to the intention of the legislature. The legislature has, intentionally, while extensively defining the term ‘public servant’ in clause (c ) of Section 2 of the Act and clause (xi) in particular has specifically intended to explore the word ‘any’ which includes all persons who are directly or indirectly actively participating in managing the affairs of any university in any manner or the form. In this context, the legislature has taken note of ‘any’ person or member of “any” governing body by whatever designation called of “any” university to be termed as ‘public servant’ for the purposes of invoking the provisions of Act 1988.
In the present case, the question for consideration is the term ‘any’ university in the broader spectrum to curb corruption in the educational institutions as referred to under Section 2(c )(xi) of Act 1988 and the legislature in its wisdom has referred to the word “any university” which clearly mandates the university referred to and controlled by its statutory mechanism referred to under Section 2(f) and deemed to be university under Section 3 of the UGC Act.
Appeal allowed.
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2020 (4) TMI 881 - TELANGANA HIGH COURT
Maintainability of petition - Alternative remedy to entertaining of the writ petition - Recovery proceedings - It is contended by the first respondent that the first petitioner failed to repay the outstanding loan amounts and that it was constrained to initiate proceedings under the Act against the petitioners and the secured asset - time limitation.
Alternative remedy no bar to entertaining of the writ petition - HELD THAT:- There is no dispute that though there is a remedy of appeal under section 18 of the Act before the Debts Recovery Appellate Tribunal challenging the impugned order of the Tribunal, since there is no Chairman appointed to the Debts Recovery Appellate Tribunal at Kolkata (which has jurisdiction over the Tribunal), and since parties have to file the said appeal at the office of the said Appellate Tribunal at Kolkata and then proceed to Allahabad where the In-Charge Debts Recovery Appellate Tribunal is functioning for any relief, we are of the opinion that the said appellate remedy is not an effective alternative remedy - this is a fit case to entertain the writ petition against the impugned order passed by the Tribunal.
Whether the SA is barred by limitation? - HELD THAT:- Having withheld the said information from the petitioners, the first respondent cannot be permitted to plead the bar of limitation because it would amount to allowing the first respondent to take advantage of its own wrong, which is impermissible in law - Having suppressed that the auction was conducted on June 14, 2018 successfully and that the second respondent was the highest bidder from the petitioners, the first respondent cannot plead that the S. A. was filed beyond the period of 45 days from the sale on September 4, 2018.
Whether there is a waiver by the petitioners of rights under the SARFAESI Act, 2002? - HELD THAT:- The Tribunal had also held that there was a waiver by the petitioners of their right to contend about illegality if any committed in the conduct of e- auction on June 14, 2018 by the first respondent-bank - In the instant case also though the first respondent-bank did not disclose to the petitioners about the sale in the e-auction held on June 14, 2018 to the second respondent, as soon as the Advocate-Commissioner's notice dated August 10, 2018 was received by the petitioners, they filed the S. A. on September 4, 2018. There is nothing in the conduct of the petitioners to suggest that they had waived any rights under the statute or the rules made thereunder. Therefore, this plea of the first respondent-bank about waiver by the petitioners of their rights under law, is rejected.
Non-compliance with rule 8(6) - HELD THAT:- No material has been produced by the first respondent-bank that it had complied with the service affixture and publication of the possession notice dated November 15, 2017 and notice dated February 21, 2018 under rule 8(6), and service and affixture of notice dated May 5, 2018. Strangely the Tribunal gave no finding on these aspects. This is clearly erroneous.
The writ petition allowed with costs of ₹ 25,000 to be paid to the first petitioner by the respondents.
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2020 (4) TMI 880 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Modifications made by the learned Adjudicating Authority in the ‘Resolution Plan’ submitted - direction to payment to unclaimed Fixed Deposit Holders - HELD THAT:- The implementation of the ‘Successful Resolution Plan’ would involve participation of the ‘Successful Resolution Applicant’, i.e. NBCC (India) Ltd. as also the three major Institutional Financial Creditors, who are Members of the ‘Committee of Creditors’ i.e., IDBI Bank Ltd., IIFCL and LIC - Meanwhile, till further orders, the approved ‘Resolution Plan’ may be implemented subject to outcome of this Appeal. The Interim Resolution Professional may constitute ‘Interim Monitoring Committee’ comprising of the ‘Successful Resolution Applicant’, i.e., the Appellant and the three major Institutional Financial Creditors, who were Members of the ‘Committee of Creditors’.
The Resolution Professional, who would be constituent of the ‘Interim Monitoring Committee’ shall continue to be paid as may be deemed reasonable by the ‘Interim Monitoring Committee’ from the date of this order. If any fee is outstanding for the past services rendered by the Resolution Professional during the ‘Corporate Insolvency Resolution Process’, the same shall be paid as per the decision of the ‘Committee of Creditors’. These directions will last till the disposal of this Appeal.
List the matter for ‘admission after notice’ on 15th May, 2020.
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2020 (4) TMI 879 - THE COMMISSIONER (APPEALS) CENTRAL GOODS & SERVICES TAX & C. EX. RANCHI
CENVAT Credit - Input services or not - GTA services for outward transportation of fly ash arising in course of generation of steam and electricity in their captive power plant - reverse charge mechanism - HELD THAT:- The decision of Hon'ble CESTAT, Principal Bench, in M/S. JINDAL STEEL AND POWER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND ST, RAIPUR [2018 (4) TMI 817 - CESTAT NEW DELHI] and that dealing with similar issue has held that in the case of INDIA PESTICIDES LTD. VERSUS COMMISSIONER OF C. EX. & S.T., LUCKNOW [2016 (8) TMI 724 - CESTAT ALLAHABAD] are relevant to the instant case at hand. In the former case it has been held that- removal and disposal of fly ash being mandate of law are part of manufacture of excisable goods, and in the latter it has been held that- Disposal of Hazardous waste- said disposal being essential activity for manufacture of final products viz. Insecticides, credit on expenses incurred for transportation of hazardous waste outside factory, admissible as input service-Demand and penalty set aside-Rule 2(1) of Cenvat Credit Rules, 2004 - both of these pronouncements sums up to conclude that all the taxable services utilised for removal of the fly ash from the power plants and transportation thereof upto the place of disposal and final disposal thereof in accordance with the provisions of the relevant environmental laws merit to be considered as input services in terms of Rule 2(1) of the rules.
There is no dispute that the fly ash is a hazardous waste and disposal thereof in a prescribed manner is a statutory obligation cast upon the Appellant by the Ministry of Environment and Forest. Thus, all the taxable services utilized for removal of the fly ash from the power plant to the designated place of disposal as well as the services utilised in final disposal thereof merit to be considered as input services and accordingly service tax paid if any on the services so utilised shall be available for credit as input service - The ownership of the goods passes on to the hands of the buyer at the place of removal and hence all the expenses beyond this point fall into the account of the buyer. Accordingly the manufacturer was not responsible for incurring any expense in respect of the goods beyond the point of place of removal and hence not eligible for credit on any service utilised beyond the place of removal. In the instant case of the Appellant, the impugned goods are neither manufactured nor carried any value. There was no sale of goods involved and hence the concept of "place of removal" cannot be construed or applied in their case. The ownership of the impugned goods all along remained with the Appellant and accordingly the onus to remove, transport and dispose the fly ash in accordance with the mandate of relevant laws was with the appellant.
Thus, all the expenses upto removal of finished goods are available for Cenvat under Section 4 of the Central Excise Act, 1944 and the Rules made thereunder - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 878 - ITAT DELHI
Assessment u/s 153A - Validity of the assessment order in absence of proper approval necessary for assessment as per the provisions of section 153D - HELD THAT:- Approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO. As mentioned earlier, the AO has submitted the draft assessment orders on 30th March, 2015 as per the order sheet entry which indicated that the AO was very much available in her office at Dehradun on 30th March, 2015.
The Office of the Addl.CIT is situated at Meerut which is about 250 Kms from Dehradun. There is no other record to suggest that the files containing the draft orders were, in fact, moved from the office of the AO at Dehradun to the office of the Addl.CIT at Meerut who went through the same and has given approval with certain amendments. It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with.
We hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. - Decided in favour of assessee.
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2020 (4) TMI 877 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI (SPECIAL BENCH)
Sanction of Scheme of Amalgamation - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Applicant Companies are hereby directed to serve notices along with copy of the Scheme upon the concerned Income tax authorities under whose jurisdiction the assessments are made, through R.P.A.D./Speed Post/Email/hand delivery, with a direction that they may submit their representations, if any, within a period of thirty (30) days from the date of receipt of such notice to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Companies, failing which, it shall be presumed that the authorities have no representations to make on the proposals.
The Applicant Companies shall publish notices as required in terms of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, in two newspapers, viz., Business Standard (in English) and Navshakti (in Marathi).
Ordered accordingly. Pronounced in open court today (22.04.2020).
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2020 (4) TMI 876 - BOMBAY HIGH COURT
Restraint on negotiating/encashing the Letters of Credit - Section 56 of the Indian Contract Act, 1972 - HELD THAT:- The Letters of Credit are an independent transaction with the Bank and the Bank is not concerned with underlying disputes between the Petitioners who are buyers and the Respondent No. 1 who is the seller - The Force Majeure clause in the present contracts is applicable only to the Respondent No. 1 and cannot come to the aid of the Petitioners.
The contract terms are on Cost and Freight basis (CFR) and the Respondent No. 1 has complied with its obligations and performed its part of the contracts and the goods have been already shipped from South Korea. The fact that the Petitioners would not be able to perform its obligations so far as its own purchasers are concerned and/or it would suffer damages, is not a factor which can be considered and held against the Respondent No. 1.
List the Petitions as per CMIS date.
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