Disallowance of interest on loan - interest added back on the ground that the diversion of loans made for non-business purposes - Held that: - the decision in the case of The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] followed, where it was held that The principle, therefore, would be that if there are funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments - addition not justified.
Disallowance of Bad Debts - case of Revenue is that conditions of subsection (2) of section 36 have not been fulfilled - Held that: - The Hon’ble High Court of Karnataka in the case of Krone Communication Ltd., [2010 (7) TMI 631 - Karnataka High Court] decided the issue in favor of the assessee, following the decision of the Hon’ble Supreme Court in the case of T.R.F. Ltd., [2010 (2) TMI 211 - SUPREME COURT] wherein it was held that after 1.4.1989, it was not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - addition not justified.
Re-opening of the assessment - addition under section 68 - Held that:- The assessee at the original assessment stage filed all the documentary evidences before Assessing Officer with regard to proving identity of the share applicants, their credit worthiness and genuineness of the transaction in the matter. No business/manufacturing activities have been carried out by the assessee during the year under consideration. The Assessing Officer accepted the returned income by showing interest income at ₹ 9,522/-. Same evidences were furnished before Assessing Officer for reassessment proceedings.
Referring to case of Lovely Exports Pvt. Ltd. (2008 (1) TMI 575 - SUPREME COURT OF INDIA) as well as order of ITAT Chandigarh Bench in the case of M/s Kisco Casting P. Ltd. [2012 (10) TMI 314 - ITAT, CHANDIGARH] which clearly supports the contention of the assessee that assessee received genuine share application money from 8 persons/entities. - Decided in favour of assessee.
Oppression and mismanagement - maintainability of appeal - Held that:- Unless and until the qualification as prescribed under section 399 of the Act, no member can file a petition before this Bench. In the present case the petitioner ceased to be a shareholder of the company and has no locus standi to file a petition invoking the jurisdiction of this Bench. Therefore the petition is not maintainable and liable to be dismissed in limine on this ground itself.
The petitioner has not denied the transfer of shares to the 4th respondent nor disputed the signatures on the share transfer forms. However at para 6(viii) it is stated that he was merely coerced by the 4th respondent along with few other persons with a threat to his life and bodily harmed, to transfer the shares held by him in the R1 Company to the 4th respondent. Further it is stated that he was coerced to sign a share transfer form which was first signed by the 2nd respondent as the 1st holder and the petitioner was forced to sign it as a 2nd holder. There is no record to show that what legal action the petitioner has taken if he was threatened to sign the share transfer form and transfer the shares to the 4th respondent.
As per law the transfer of shares by the petitioner is legal and valid. Further the petitioner contends that he represented the company when the company filed a suit for specific performance against the defendant being OS No. 82 of 2006 before the Hon'ble Court of Subordinate Judge, Calicut. The R1 Company is the plaintiff in the suit however the petitioner represented the company in the capacity as managing director. The said stand cannot be a ground to contend that he continued to be a shareholder of She company or has any vested interest, further the 4th respondent filed an affidavit dated 26.07.2011 before the Hon'ble Sub-court in OS No. 82 of 2006 clarifying the position and stated that the petitioner had transferred his shares on 27.04.2011 itself and he ceases to be a director of the company and lost all association with the company. The petitioner ceases to be a shareholder of the company and has no locus standi to file a petition before this Bench
Scheme of amalgamation - dispense with the requirement of convening the meetings of its equity shareholders, secured and unsecured creditors to consider - Held that:- Applicant/transferor company has 02 equity shareholders and 03 unsecured creditors. Both the equity shareholders and all the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the applicant/transferor company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the applicant/transferor company, as on 31st July, 2015.
Also as carefully considered the aforesaid case laws cited at the Bar, wherein the transferee company, being the holding company, has been granted exemption from taking out separate proceedings under Section 391(2) of the Companies Act, 1956. In view of this settled legal position and considering the Scheme of Amalgamation, the requirement of the transferee company having to approach this Court under Section 391(2) of the Companies Act, 1956 for sanction of the Scheme of Amalgamation is dispensed with.
De-merged company seeking dispensation of meetings of shareholders, preference shareholders and unsecured creditors - Held that:- Having heard learned advocate Mr. S.P. Majmudar appearing for the applicant company and considering the consent letters of the equity and preference shareholders and unsecured creditors and considering the certificate of the Chartered Accountant annexed with the application, the meetings of the equity shareholders and unsecured creditors of the applicant company for considering the proposed Scheme of De-merger are dispensed with and so also the advertisement in the newspaper and publication in Government Gazette are dispensed with.
The meeting of secured creditors shall be held on 12.12.2015 at the registered office of the applicant company. It is provided that Mr. Purshottam Gandevikar and in his absence Mr. Girish Gandevikar shall be the Chairman of the meeting and shall submit the report of the meeting to this Court. The notice of the meeting may be published in English daily, ‘Indian Express’, Baroda edition and Gujarati daily, ‘Divyabhaskar’, Baroda edition.
The High Court of Meghalaya directed parties to go to Custom authorities for adjudication on preliminary issues raised in the writ petition. The petitioner was granted liberty to return to the Court if still aggrieved after Custom authorities' decision. The writ petition was disposed of with no decision on merit by the customs authority.
State Government discrimination between the paper lottery and online lottery in pursuance of the provision of Section 5 of Lotteries (Regulation) Act, 1998 - Held that:- If a paper lottery is being prohibited by a particular State then that paper lottery has to be prohibited as a whole. Likewise, if online or internet lottery is to be prohibited by a State then that online lottery or internet lottery of all States including that State also has to be prohibited. Viewed from this angle, we are of the considered opinion that State of Kerala was well within its rights to prohibit the sale of online or internet lotteries in its State and there is no fault in it. It is well within the powers conferred on it under Section 5 of the Act. A State Government can organize, conduct or promote a lottery subject to conditions mentioned in Section 4 and if there is any violation of the conditions mentioned in Section 4, it would be always open to the State Government to prohibit such lottery and that would be within the legislative power vested with the State under Section 5 of the Act as in that case the State would be only complying with the provisions of the Act made by the Parliament. The learned Single Judge while examining the facts of the case, manner and method in which the sale of online lotteries are conducted, has already held that it violates the provisions contained in Section 4 of the Act. In fact, during the course of arguments, no effort was made to dislodge the findings recorded by the courts below. The view adopted from the observation made by this Court in B.R. Enterprises (1999 (5) TMI 498 - SUPREME COURT OF INDIA), in any case, is possible.
Learned single Judge of the High Court rightly mentioned in his judgment that “in fairness, it must be conceded that Section 5, in the light of the interpretation in B.R. Enterprises (1999 (5) TMI 498 - SUPREME COURT OF INDIA), admits two interpretations. One is that the State can prohibit any form of lottery, if only it is not running any lottery at all. The second interpretation is that the State can prohibit a particular form of lottery, if it is not running that form of lottery, even if it is running other types of lotteries. The Act has been designedly made to suppress the mischief of lottery.
Therefore, we feel that an interpretation, which advances the object of the Act, should be favoured. That means, the State can prohibit online lotteries, if it is not running the said type of lotteries. The decision in B.R. Enterprises (supra), which was dealing with the prohibition of paper lotteries, does not stand in the way of accepting such an interpretation. Accordingly, the main challenge against the impugned notification that it violates Section 5 of the Act is repelled. In view of the foregoing discussion, we do not find any infirmity in the order passed by the Division Bench of the High Court dated 23.05.2006.
Transfer pricing adjustment - international transactions between the assessee and its A.E. towards provisions of clinical study management and monitoring support services - selection of comparable - Held that:- The assessee company is engaged in manufacturing and sale of pharmaceutical products, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable.
Disallowance of depreciation claimed on assets of Ankleshwar plant allowed as decided in assessee's own case.
Treatment to income from sub–leasing of property - income from business OR house property income - Held that:- As relying on assessee's own case we allow assessee’s claim of house property income in respect of sub–leasing of office premises.
Review petition - provisional attachment of bank accounts u/s 281B - Held that:- Consequent to the order dated 20th November, 2015 passed in the Review Petition, the four Stand By Letters of Credit (SLBC) have been extended till 1st June, 2016 by respondent no.5 Bank at the instance of respondent no.6 i.e. Jaiprakash Associates Ltd.
The subject four SBLCs have been extended until 1st June 2016. The undertaking of Jaiprakash Associates Limited, recorded in order dated 20th November, 2015 i.e. that the SBLCs will continue to be extended and / or replaced from time to time, for a period of six months each, has become operative forthwith, such that will secure the validity of the four SBLCs (including any extension or replacement thereof) for a period of eight clear weeks after disposal of the pending applications before the Authority for Advance Rulings instituted by the Review Petitioner – Formula One World Championship (FOWC) and respondent no.6 Jaiprakash Associates Ltd.
The provisional attachment of the four SLBCs by the Revenue under Section 281B of the Income Tax Act, 1961 (first done by communication dated 10th March, 2014) would continue to encumber the four SLBCs as renewed and / or replaced. This attachment of the four SLBCs as renewed and / or replaced will continue till such time as the Authority for Advance Ruling Rules on the pending application of FOWC and M/s. Jaiprakash Associates and for further period of eight weeks from the Ruling of the Authority for Advance Ruling.
Scheme of amalgamation - Held that:- Dispense with the requirement of convening the meetings of their equity shareholders, preference shareholders, secured and unsecured creditors to consider and approve, with or without modification, the proposed Scheme of Amalgamation, The Board of Directors of the transferor and transferee companies in their separate meetings held on 10th August, 2015 have unanimously approved the proposed Scheme of Amalgamation. Copies of the Resolutions passed at the meetings of the Board of Directors of the transferor and transferee companies have been placed on record.
PMLA - attachment of residential houses - Provisional Attachment Order - accused of commission of scheduled offence under PMLA - Held that:- The appellant did not have any nexus with the accused Shri Praramjit Singh Sandhu or his wife Smt. Parminder Kaur, that he did not know about the criminality attached to the subject property and that the appellant is a bonafide purchaser of the subject property in good faith for consideration. We accordingly hold that the subject property i.e. residential house No. B-32-E, 14/6290 Plot No. 53 - 54, New Akash Nagar, Village Bhura, Jalandher By Pass, Ludhiana in the hands of appellant is not proceeds of crime and is therefore, not liable to provisions of attachment and confiscation under PMLA. Consequently, the appeal is allowed and the impugned order dated 25th November, 2010 to the extent of confirming provisional attachment of the subject property and provisional attachment order No. 01/2008 dated 23rd December, 2008 to the extent of provisional attachment of subject property are set aside
Unexplained cash credits - Addition to the commission income at 0.15% - reasonable percentage to the commission on the total turnover - Held that:- Respectfully following the orders of the Tribunal including the order of Tribunal in assessee’s own case in the immediately preceding year [2008 (3) TMI 687 - ITAT MUMBAI], we find that the ld. CIT(A) has rightly deleted the addition as held the theory of Assessing Officer to treat the entire deposit as unexplained cash credits, cannot be accepted in the light of assessment orders in the case of beneficiaries and also in the light of the fact that assessee is only concerned with the commission earned on providing accommodation entries. We, therefore, of the view that since the assessee itself has declared the commission on turnover at 0.15% which is more than the percentage considered to be reasonable the same should be accepted. We, accordingly, accept the commission declared by the assessee and set aside the order of the CIT (A) in this regard - Decided against revenue
Allowabaility of expenses - expenses claimed by the assessee in its profit and loss account disallowed on ad hoc basis - Held that:- Since, the issue raised herein has already been decided by the Tribunal and nothing has been brought on record by the ld. DR to contradict the findings of the Tribunal, we therefore, direct the AO to follow the order of Tribunal for this year also. We therefore, hold that 50% of the expenses should be allowed. The AO is directed to give relief accordingly.
CENVAT credit - inter-unit transfer of goods - transfer of final product to sister unit and credit availed by sister unit - interest - Held that: - the decision in the case of Gujarat Narmada Fertilizers CO. Ltd., [2012 (4) TMI 309 - GUJARAT HIGH COURT], is applicable to the present case, where it was held that interest liability did not arise in view of no dispute regarding availment of cenvat credit by the sister unit and payment of differential duty by the assessee before issuance of the SCN - appeal allowed - decided in favor of appellant.
Proper officer under Section 28(1) of the Customs Act - proceedings initiated under Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 by the Deputy Commissioner of Central Excise - the decision in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-I Versus MOLEX INDIA LTD. [2014 (10) TMI 836 - KARNATAKA HIGH COURT] contested, where it was held that Though the Parliament amended Section 28, it has no application to the facts of this case, because the Deputy Commissioner of Central Excise who initiated the proceedings is not the officer of Customs - Held that: - the decision in the above case upheld - SLP dismissed - decided against Revenue.
Condonation of delay - Tribunal as well as Supreme Court declined to condone the delay - the decision in the case of DECCEN CO-OP TEXTILES INDUSTRIES LTD. Versus UNION OF INDIA [2015 (8) TMI 1175 - BOMBAY HIGH COURT] contested - Held that: - delay condoned - SLP dismissed.
CENVAT credit - inputs/capital goods - rock bolt - Held that: - The term “fixtures” is finding place in the definition of capital goods for the purpose of availment of Cenvat credit. Since by nature of use of the disputed goods, the same is to be considered as fixtures and the same is categorized as capital goods in the definition clause, in my opinion, denial of Cenvat credit is not proper and justified - It is an admitted fact on record that the mines where the disputed goods have been used is the captive mine of the appellant, solely dedicated for the purpose of the appellant - credit allowed - appeal allowed - decided in favor of appellant.
Condonation of delay - decision in the case of COMMISSIONER OF C. EX., LUDHIANA Versus BT. STEELS LTD. [2009 (12) TMI 173 - PUNJAB AND HARYANA HIGH COURT] contested - Held that: - There is a delay of 840 days for which no satisfactory explanation is furnished - appeal dismissed on the ground of delay.
Licence fee payable to the Railways is an accrued liability - Held that:- The questions to be considered in these appeals of the Revenue as well as the cross-objections of the Assessee are reframed as under:
(i) Whether the order dated 31st July 2009 of the ITAT is in conformity and decides all the aspects/issues remitted to it by order dated 11th December 2008 passed by this Court?
(ii) If the answer to the above question is in the negative, was the assumption of jurisdiction under Section 147 of the Act for the AYs 1997-98 to 2000-01 and 2002-03, valid?
(iii) Was the ITAT right in holding the licence fee payable to the Railways to be an accrued liability?
Sanctioning of the Scheme of Amalgamation - Held that:- When all the equity shareholders and unsecured creditors of both the petitioner companies have consented to the Scheme of Amalgamation, convening of their meetings are ordered to be dispensed with. Since there is no secured creditor of both the companies, no meeting is required.
Deduction u/s 80IB - Constitutional validity of the amendment to sub-Section (9) of Section 80-IB - Hec has held [2015 (3) TMI 986 - GUJARAT HIGH COURT] that Explanation added to Section 80-IB(9) by amendment is substantive law and could not apply retrospectively. The Explanation added to Section 80-IB(9) breaches the rule of law and is arbitrary being violative of Article 14 of the Constitution of India is struck down. In the result, both the writ petitions succeed and are allowed. The Explanation to Section 80-IB(9) of the Act is held to be ultra vires to Article 14 of the Constitution of India
Held that:- Issue notice on the special leave petitions as also on the prayer for interim relief returnable after 10 weeks.
Mr. Shashibhushan P. Adgaonkar, Ms. Abha R. Sharma and Ms. Bindi Girish Dave, learned counsel, have entered appearance on behalf of the respondents. No further notice need be issued to them.
Counter affidavit, if any, be filed within six weeks. Rejoinder affidavit, if any, be filed within four weeks therefrom.
List the matters after ten weeks. The prayer for interim relief shall be considered on the next date of hearing.
As we are entertaining the matter, the High Court(s) where the appeals are pending shall not finalize the same till the matter is dealt with by this Court.
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