|
Advanced Search Options
Case Laws
Showing 221 to 240 of 1644 Records
-
2025 (4) TMI 1424
Eligibility of the assessee trust for registration u/s 12AB - application of the assessee was rejected on the pretext non maintaining separate set of books of account and alleging that the assessee is engaged in commercial activities - HELD THAT:- As is evident from the record that the trust runs Dharmshala since 1962 and that activities cannot be compared as commercial activities. Considering all the aspect of the matter the Bench feels that the assessee should represent the case and contested the written submission placed before the CIT(E).
Considering the fact that running of dharmshala cannot be termed as charitable activities and thereby the assessee cannot be denied registration merely on that count and since the assessee has prayed before us that they may given one more chance to contest the issue raised before the Ld. CIT(E) and its merit and therefore, considering that of aspect of the matter, the assessee should be given one more chance to contest the case before the ld. CIT(E) - Appeal of the assessee is allowed for statistical purposes.
-
2025 (4) TMI 1423
Eligibility of Registration u/s 80G(5)/12A - HELD THAT:- The registration u/s 80G(5) is available to the Trust who are either registered under section 12A of the Act or 10(23C) of the Act. It is also noted that Assessee had filed necessary details along with provisional application for 12A registration.
CIT(E) has rejected the registration of the assessee under section 12A of the Act, only on one ground that assessee failed to submit the details called-for. However, it is also a fact that primary details like, copy of trust deed, copy of financials were already available with the ld.CIT(E), and ld.CIT(E) has not commented on it.
Respectfully following the decision of Torna Rajgad Parisar Samajonnati Nyas [2025 (1) TMI 1473 - ITAT PUNE] we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purpose.
-
2025 (4) TMI 1422
Disallowance of Depreciation on the assets pursuant to the scheme of demerger - concept of grouping all assets having similar rate of depreciation in a single block - assessee continued to claim depreciation on the WDV of various block of assets, without excluding the assets so transferred under the scheme of demerger to the above said company - HELD THAT:- Identical issue was considered by the co-ordinate bench in AY 2003-04 [2024 (5) TMI 1563 - ITAT MUMBAI] noticed that it is a recurring issue every year. Further, it noticed that another co-ordinate bench has reached a compromise formula in AY 2008-09 [2022 (12) TMI 168 - ITAT MUMBAI] wherein the AO was directed to treat the opening WDV of assets transferred to the above said company as loss of assets. Hence, the co-ordinate bench held in AY 2003-04 that, in order to give effect to the above said direction given by the Tribunal in AY 2008-09, the depreciation claimed by the assessee in AY 2003-04 should be allowed. Accordingly, the co-ordinate bench deleted the disallowance of depreciation made by the AO in AY 2003-04. Accordingly, we also direct the AO to delete the disallowance of depreciation made on the assets transferred to M/s Ciba Specialty Chemicals (India) Ltd in this year also.
Addition made by enhancing the value of closing stock as on 31.3.2004 by the amount of estimated secondary freight cost - HELD THAT:- The co-ordinate bench, vide its order passed [2024 (3) TMI 1438 - ITAT MUMBAI] has deleted this addition as held that the consistently followed method of valuation of stock, which has been accepted by the departmental authorities earlier, should not be disturbed, since a stray departure in one year tends to upset the calculations. Following the above said decision, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition.
Disallowance of claim relating to Voluntary Retirement Scheme compensation - HELD THAT:- As the provisions of sec. 35DDA are related to lump sum compensation paid, since the question of amortization shall arise only in respect of lump sum payments. The purpose of spreading the deduction into five years is to avoid distortion of the profits in one year and also collection of income tax. Accordingly, we are of the view that the provisions of sec.35DDA shall not apply to the pension payments. In the instant case, the incremental liability is related to pension payments. Hence, we are of the view that the provisions of 35DDA shall not be applicable to pension payments, which are recurring in nature. Accordingly, we reject the view taken by the tax authorities on the applicability of sec. 35DDA to the case of the assessee.
Claim for deduction of incremental liability - We notice that the Ld CIT(A) has also taken different stand in the earlier years, i.e,, in some years, the Ld CIT(A) has confirmed the disallowance of provision for VRS compensation and in some other years, it has been deleted. A provision for expenses is created for a known liability under the accounting principles. Hence, the said claim made by the assessee is in principle allowable as deduction, since it is a provision created for a known liability. Hence the AO was not right in treating it as a contingent liability. Hence the Ld CIT(A) was right in allowing the same as deduction.
However, if the provision so made is not allowed as deduction in any of the years by the AO or the appellate authorities, then the actual payment made out of that provision is allowable as deduction. It is the submission of the assessee that Rs. 3,89,26,463/- represents actual payment made in this year. Hence, if the relevant provision amount had been disallowed in any of the prior years, then the actual payment should be allowed as deduction. However, the relevant details are not available on record. Hence the claim of the assessee requires verification at the end of the AO. Accordingly, we restore this alternative ground of the assessee in all the three years under consideration to the file of the assessing officer for examining the same in the light of discussions made supra.
Nature of expenditure - software expenses - revenue or capital expenditure - HELD THAT:- We set aside the order passed by Ld CIT(A) on this issue in all the three years and direct the AO to allow software expenses as revenue expenses.
Disallowance of travel expenses on visit of foreigners - HELD THAT:- We notice that disallowance of identical expenses has been made in the earlier years also. The Tribunal has deleted the identical disallowance made in AY 2002-03 [2024 (3) TMI 1438 - ITAT MUMBAI] wherein it has followed the decision rendered by the co-ordinate bench in the assessee’s own case in AY 1997-98 [2016 (1) TMI 1491 - ITAT MUMBAI]. In all these years, the Tribunal noticed that the foreigners are the executives specializing in the business carried on by the assessee and they visit India for business purposes only. Accordingly, the Tribunal has deleted the identical disallowance made in the earlier years. Thus direct the AO to delete the disallowance made in both the years mentioned above.
Disallowance u/s 14A - CIT(A) has confirmed disallowance to the extent of 2% of dividend income in AY 2004-05 - HELD THAT:- We set aside the order passed by Ld CIT(A) on this issue in AY 2007-08 and direct the AO to restrict the disallowance u/s 14A to 2% of the dividend income.
Addition made by loading unutilized Modvat credit amount to the value of closing stock - as submitted that the AO should be directed to adopt the same method for the opening stock as on 1.4.2004 and that the method of determining the value of stock should be identical both for closing stock and opening stock of any year - HELD THAT:- Accordingly, we direct the AO to adopt the value of closing of one year as the opening stock of the succeeding year.
Disallowance of advances written off - HELD THAT:- We notice that the amount so written off is allowable as deduction u/s 28 or u/s 37(1), if the said advances had been given for revenue purposes. In our view, the question of examining the amount so written off u/s 36(1)(vii) shall not arise in this case. A.R submitted that the assessee is having relevant details relating to the advances so written off.
This issue requires fresh examination at the end of the AO in both AY 2004-05 and 2006-07. Accordingly, we set aside the order passed by CIT(A) on this issue in both the years under consideration and restore the same to the file of the AO for examining afresh. The assessee is also directed to furnish the details of advances and show that those advances were given for revenue purposes.
Determination of “Profits of business” for the purposes of deduction u/s 80HHC - HELD THAT:- In the instant case, in our view, the royalty receipts are independent source of income. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the action of the AO in excluding 90% of royalty income from profits for the purpose of computing profits of business as per Explanation (baa) to sec.80HHC of the Act. With regard to other receipts, the Ld A.R submitted that they are covered by the decisions rendered by the Tribunal in earlier years. Accordingly, we direct the AO to follow the decisions rendered by the Tribunal in respect of other receipts. The order passed by Ld CIT(A) is modified accordingly. The matter is restored to the file of the AO for computing deduction u/s 80HHC.
Assessment of notional value of rent for the property used by the demerged company - HELD THAT:- We notice that the AO has adopted adhoc rate for determining the Annual letting value. We notice that the said methodology is not in accordance with law laid down by Hon’ble Bombay High Court in some of the cases. We also notice that the assessee has also raised similar contentions before the tax authorities. Accordingly, we are of the view that the determination of Annual Letting value (ALV) requires fresh examination. Accordingly, we restore this issue to the file of AO in AY 2004-05 and 2006-07 for determining ALV in accordance with the decisions rendered by Hon’ble Bombay High Court.
LTCG - determination of fair market value as on 1.4.1981 for the land sold by the assessee - HELD THAT:- We notice that an identical issue has been considered by the co-ordinate bench in AY 2002-03 and 2003-04. When the appeal of AY 2002-03 was pending, the DVO report was brought to the notice of the Tribunal. The DVO had determined the fair market value as on 1.4.1981 at Rs. 71.12 per sq ft. Accordingly, the Tribunal directed the AO to compute the long term capital gains on sale of land by adopting the fair market value as on 1.4.1981 as per the rate determined by the DVO.
There should not be any dispute that the long term capital gains has to be computed for the area of land, which is actually sold by the assessee. Accordingly, we direct the AO to compute the long term capital gains on the actual area sold by the assessee and for that purpose, the AO should adopt the fair market value of rate per square feet as on 1.4.1981 as determined by the DVO.
Disallowance of adjustment by way of excess/short amount in respect of the year end provision made for expenses - HELD THAT:- There is no dispute that the provision for expenses were made on the basis of estimates made with reliable data. Whatever may be the degree of estimation, there bound to be some difference when the actual bill is received and hence the same would require adjustment on account of excess/short provision. Such adjustment would be a recurring feature and they are considered as current year’s expenses as per the accounting principles. Hence, there is no reason to disallow the same. Accordingly, following the order passed by the co-ordinate bench in the hands of the assessee in AY 2008-09 [2022 (12) TMI 168 - ITAT MUMBAI] we set aside the order passed by Ld CIT(A) on this issue in all the three years, viz., AY 2004-05, 2006-07 and 2007-08 and direct the AO to delete this disallowance made.
Interest u/s 234C is required to be computed on the returned income. Accordingly, we restore this issue to the file of the AO for computing interest u/s 234C as per the provisions of the Act.
Charging of Dividend Distribution Tax - contention of the assessee that the rate prescribed under relevant DTAA shall be applicable to Dividend distribution tax also - HELD THAT:- We notice that the above said claim of the assessee is against the decision rendered in the case of DCIT vs. Total Oil India (P) Ltd [2023 (4) TMI 988 - ITAT MUMBAI (SB)] Accordingly, we reject this ground of the assessee.
Addition made u/s 50C - HELD THAT:- As all the relevant factual aspects, which are necessary for the purposes of sec.50C, have not been furnished by the assessee to the tax authorities. Hence, we are of the view that this issue requires fresh examination at the end of the AO. If the assessee is able to show that it has received part consideration on the date of the entering of agreement for sale in the manner provided in the proviso to sec.50C of the Act, then the assessee would get the benefit of the proviso. In that case, the stamp duty value as on the date of agreement should be compared with the actual consideration.
-
2025 (4) TMI 1421
TDS u/s 194H - discounts allowed to its distributors on sale of starter kits and recharge vouchers (RCVs) - HELD THAT:- As relying on Tata Teleservices Limited [2018 (5) TMI 703 - ITAT DELHI] and Bharti Cellular Ltd. [2024 (3) TMI 41 - SUPREME COURT] we hold that no TDS u/s 194H is deductible in case of discounts allowed to the distributors on sale of starter Kits and recharge vouchers.
Assessee in default u/s 201 - non-deduction of tax at source under the provisions of section 194J on inter connect usage charges paid by the assessee to the other telecom operators - HELD THAT:- As relying on M/S TATA Teleservices Ltd. [2018 (5) TMI 703 - ITAT DELHI] we hold that no TDS u/s 194J is deductible in case of roaming charges paid.
Grounds raised by the assessee are allowed.
-
2025 (4) TMI 1420
Disallowing the claim of amortization of surface rights - as submitted what the assessee acquired by incurring the expenditure was an enduring business right in respect of mining the lignite and not acquisition of any fixed asset - HELD THAT:- In the set aside proceedings the assessee brought on record the fact that M/s. RSMML has not claimed any expenditure in relation to acquisition of surface rights of Kapurdi mines on behalf of the assessee for which attention was drawn to Note No.11.6 of Notes to Accounts of M/s. RSMML in its annual report for F.Y. 12-13 where it disclosed that it has not treated the amount received from the assessee for acquiring the mining right for the assessee as its asset or liability in the financial statements but since the title of land at Kapurdi is mutated to M/s. RSMML Ltd., the same is shown at a nominal value of Rs. 1 in its balance sheet.
This fact is also confirmed by M/s. RSMML vide letter dt.10.07.2018 (PB 65-68). The AO at para 3.3 of its order for A.Y. 2012-13 has accepted that no benefit has accrued to M/s. RSMML in respect of the said land.
Thus, when this fact is on record and not disputed by the AO read with the direction of the coordinate bench, the claim of amortization of surface rights are allowable. Hence by not following the direction of coordinate bench, addition confirmed by both the lower authorities is illegal & bad in law and therefore, the same be directed to be allowed.
Allowability on account of depreciation on intangible asset in the nature of business right acquired on account of issue of equity shares free of cost - Whether mining lease transfer deed does not involve payment of any consideration? - HELD THAT:- The assessee is failed to demonstrate any visible benefit accrued to it by virtue of this free allocation of shares to M/s. RSSML. There is no documentary evidence furnished before us which confirms any sort of technical or other support being drawn by the assessee out of this transaction. As an appropriate amortization charge where the benefit to the assessee was visible in the form mining lease charges paid are duly allowed, but on this issue we are not convinced with the claim of the assessee that any intangible asset came into existence which benefited the assessee in terms of its business operation. Assessee is not entitled to claim the depreciation on this show called intangible asset. Hence the orders of authorities below are sustained and ground raised by the assessee is dismissed.
-
2025 (4) TMI 1419
Prohibiting the employment of contract labour at the Central Warehousing Corporation's Inland Clearance Depot (ICD) - Challenge to notification dated 17 November 2006 issued by the Ministry of Labour and Employment, Government of India, whereby employment of contract labour in the petitioner’s establishment was prohibited - non-application of mind, as required by, and in accordance with, Section 10 (2) of Customs Act, 1962.
Whether Incidental or Necessary, the Nature of Work Carried Out by Contractual Labourers at CWC’s ICD, Patparganj? - HELD THAT:- From interpretation of Section 10 (2) (a), it appears that the argument of work carried out being incidental to, rather than a core function of the enterprise, holds no water. Furthermore, keeping in mind the language of the section – “incidental to, or necessary for the industry,”, the finding of the committee that contract labour has been carried on by the same workers despite changes in contractors since 1985 speaks to a certain necessary nature of the work being carried out.
Whether the Work is of a Perennial nature - HELD THAT:- The CACLB’s findings on the subject are that the work is of perennial nature, and that the same is evidenced by the continued hiring of the same workmen since 1985. Their analysis confirms the argument of the UOI that regardless of trends of mechanisation, a manpower element will always be required given the nature of work - This drastic decline in total staff employed by the CWC from the year 2000 until 2020 does not reflect in the fluctuations of contract labourers deployed, which were largely similar over 18 years out of the 20-year period for which data was produced.
Whether work is done ordinarily through regular workmen in that establishment or an establishment similar thereto? - HELD THAT:- The UOI echoes the unequivocal finding of the CACLB in its 53rd MoM that similar work is being carried out by regular employees at a similar establishment of the CCI.
Whether the work is sufficient to employ a considerable number of whole time workmen? - HELD THAT:- The deployment of around 300 contractual labourers each year over 18 years out of a 20-year timeframe speaks to a sufficiency of work. This number is no small one, and cannot be brushed aside as being insignificant.
Conclusion - i) There has been no error committed by the Government in the passing of the impugned notification and that the CACLB’s 53rd MoM shows application of mind to the factors enshrined within Section 10 (2) (a) with specific consideration of data pertaining to the ICD at Patparganj. ii) The impugned notification 17 November 2006 issued by the Ministry of Labour and Employment, Government of India, under Section 10 (1) of the Act in respect to the prohibition of employment of contract labour at the CWC’s ICD at Patparganj is upheld.
Petition disposed off.
-
2025 (4) TMI 1418
Classification of imported Roasted Areca Nuts - to be classified under Chapter Heading 2008 19 20 (Chapter 20) or under Chapter Heading 080280 (Chapter 8) of the Customs Tariff Act, 1975 for the purpose of levy of Basic Customs Duty (BCD)? - HELD THAT:- Considering the submissions made by learned advocates for the respective parties, without entering into the merits of the matter, the petition is disposed of by issuing the directions in the interest of justice - The petitioner shall deposit Rs.3,25,000/- being 15% of 30% Basic Customs Duty and 10% SWS on BCD on declared value of the goods imported.
Petition disposed off.
-
2025 (4) TMI 1417
Waiver of detention and demurrage charges on imported goods detained by Customs - respondent No. 4 is a delivery agent of the shipping line - respondent No. 4 is bound by the waiver letter issued by respondent No. 2 to deliver the Cargo to the petitioner or not - Authorized Sea Carrier or an Authorized Carrier under the SCMTR, 2018 - HELD THAT:- As per the provisions of the Regulations, 2018, the ‘Authorized Carrier’ means an Authorized Sea Carrier, authorized train operator or a custodian, registered under Regulation 3 and postal authority. Respondent No. 4 is registered under sub-regulation (3) as Authorized Sea Agent which is apparent from the inquiry made by respondent Nos. 1 and 2 on the portal of the regulation. Therefore, the contention of the respondent No. 4 that the Regulations are not applicable to respondent No. 4 cannot be accepted.
The contention raised on behalf of respondent No. 4 that the respondent No. 4 is only a delivery agent appointed by authorized Sea Carrier as per the definition of section 2 (1) (d), respondent No. 4 is neither the authorized Carrier nor Authorized Sea Carrier nor an authorized train operator or a custodian as defined under section 2 (1) (e) and 2(1) (f) and therefore, the Regulations are not applicable to the respondent No. 4 who is only the owner of the containers and was asked to deliver the goods to the petitioner as a delivery agent of the Authorized Sea Carrier and therefore, the contention that, the impugned waiver letter dated 17.01.2025 is not binding upon the respondent No. 4, is not tenable in view of the fact that respondent No. 4 is already registered as an Authorized Sea Agent and was an agent of the Authorized Sea Carrier who has filed the Bill of Lading in question.
The provision of Regulation 10 (1) (l) of Regulations, 2018 makes it clear that the Authorized Carrier is not permitted to demand any container detailed charges if the containers are detained by the customs for the purpose of verifying the entries made under section 46 and section 50 of the Act, if the entries are found to be correct. In the facts of the case by letter dated 10.10.2025, respondent No. 2 has granted No Objection Certificate for release of the goods as the Bill of Entry was found correct and accordingly waiver letter dated 17.01.2025 was issued and accordingly, the petitioner is exempted from making payment of detention charges from 24.12.2024 to 10.01.2025.
Conclusion - i) The waiver order/letter dated 17.01.2025 issued by respondent No. 2 is binding upon respondent No. 4 and respondent No. 4 is required to implement waiver order passed by the respondent No. 2 as per the provisions of the Regulation 10 (1) (l) of the Regulations,2018. ii) The respondent No. 4 is hereby directed to release the goods which is under their custody and not under the detention of the Customs authority by implementing waiver letter dated 17.01.2025 for waiver of the detention charges under Regulation 10 (1) (l) Regulations, 2018 for the period from 24.12.2024 to 10.01.2025 as stated in the waiver letter.
Petition disposed off.
-
2025 (4) TMI 1416
Vires of Impugned Policy Circular No. 06/2018 dated 22.05.2018 - unlawfully inserting additional conditions - benefits under the Service Export from India Scheme (SEIS) - issuance of SCN to cancel the scrips issued to the petitioner under the scheme notified as Service Export from India Scheme (SEIS) - HELD THAT:- On perusal of Section 28AAA of the Customs Act, 1962, it is clear that the impugned show cause notice is in nature of recovery of consequential proceedings to the order passed by the DGFT which still holds the field and as such the respondent authorities are required to adjudicate the show cause notice in the facts of the case and no interference is called for at this stage.
The Hon’ble Supreme Court in catena of decisions has held that the Court should not interfere at the stage of issuance of show cause. Whereas in the facts of the case when the impugned show cause is consequential to the order in original passed by the DGFT, any observation or interference by this Court may hamper further challenge to such order-in-original passed by DGFT before appropriate forum.
No interference is made at this stage as the petition is filed at a premature stage in view of the fact that the very issue of challenge to the impugned Circular No. 6 of 2018 shall be the subject matter of challenge by the petitioner or to challenge the order-in-original passed by the DGFT and therefore in such circumstances, the petition is not entertained and accordingly dismissed in limine.
Conclusion - i) The petition challenging Circular No. 06/2018 and the Show Cause Notice dated 21.06.2024 is dismissed in limine as premature. ii) No interim relief restraining the respondents from adjudicating the Show Cause Notice is granted.
Petition dismissed.
-
2025 (4) TMI 1415
Reasonable belief to seize 3998.83 grams of gold or not - evidences available on record prove that the seized gold bars were smuggled into India from Bangladesh without any legal documents - discharge of burden of presumption under section 123 of Customs Act, 1962 - failure to follow the procedure prescribed under section 138B vitiated the proceedings in the impugned case - reliability of statements of Manoj Kumar Nishad & Shri Rajan Kumar Sahni, later retracted.
Whether Department could establish the ‘Reasonable belief’ to seize 3998.83 grams of gold valued at Rs 2,12,79,096, from Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi? - Whether evidences available on record prove that the seized gold bars were smuggled into India from Bangladesh without any legal documents? - HELD THAT:- The power bestowed in Section 110 of the Customs Act, 1962, places a pre-condition for such seizure. The essential pre-condition being that the proper officer should have reasons to believe that that such goods are liable to confiscation under the Act; once such seizure is done, Section 123 of the Customs Act, 1962 shifts the burden of proof to prove that goods are not smuggled on the person from whom the goods are seized - he impugned Gold was seized from Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi. Understandably, seizure took place at a place far away from Customs Station, Air or Sea port, in an area not specified under a Section 111(H), as notified under Section 6 of the Customs, Act,1962; there were no foreign markings on the gold pieces seized; the purity was found to be 99.92, 97.81,99.26 and 89.34 and not 99.99 % by weight. It was not established that the persons apprehended were coming to India, form as place outside India.
Hon’ble Delhi High Court in the case of Shanti Lal Mehta v. UOI and Others [1982 (11) TMI 56 - HIGH COURT OF DELHI]. The Hon’ble High Court reviewed the jurisprudence on the matter till then and set aside the confiscation and penalty on the ground that there was lack of reasonable belief on part of the proper officer before the seizure was affected and section 123 was not to be invoked.
There is no document available on record to establish that gold bars/pieces were smuggled into India from a place outside India. The analysis of CDR only indicates that Shri Sharad Chandra Agrahari was in touch with Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni at various places and on various dates in India - The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of retracted statements without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record that establishes that the officers had reasonable belief to seize the goods.
Whether the appellants Shri Sharad Chand Agrahari of M/s Bajrang Billion Traders, in the facts and circumstances of this case, discharged the burden of presumption under section 123 of Customs Act, 1962? - HELD THAT:- No critical details about the persons who carried the gold from across the border, what was place of crossing the international borders, what was the mode of transport and how the finances were arranged etc. were neither asked by officers nor stated by the accused. The facts claimed to have been confessed regarding the alleged smuggling of the impugned Gold are very general in nature. It would be very naïve to expect that the accused would confess the most minute details, even if they actually smuggled the impugned goods. What is intriguing is that the officers did not even put the relevant and pertinent questions to unearth or establish the act of smuggling. As such, it is not open for the department to draw conclusions from a general statement to particularize the details about the impugned goods. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, they cannot be conclusively relied upon.
Whether not-following the procedure prescribed under section 138B vitiated the proceedings in the impugned case? - HELD THAT:- In the instant case the Adjudicating Authority did not follow the procedure, laid down under Section 138B, in order that he could rely on the statements of Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, who are co-accused, to conclude that the impugned gold was liable for confiscation. The mandate not having been followed statements of the Shri Sharad Agrahari etc. cannot be held to be voluntary in nature and hence reliable.
The provisions of Section 123 are not invited. Even assuming that the same are attracted, the appellants have discharged the burden which is not negated by the department. The proceedings were vitiated for not following the procedure laid down under Section 138B of the Customs Act,1962. Principles of Natural Justice have been violated in not examining the witnesses as per Section 138B.
Whether the statements of Manoj Kumar Nishad & Shri Rajan Kumar Sahni, later retracted, can be relied upon to establish that the goods are liable for confiscation and the persons are liable to pay penalty Section 112(b) of the Customs Act,1962? - HELD THAT:- No case has been made by Revenue, for seizure or confiscation of the impugned gold, Pithu Bag and packing material. Consequently, no case has been made for imposition of penalties.
Conclusion - i) The Department failed to establish reasonable belief at the time of seizure; hence, the seizure was not sustainable and Section 123 could not be invoked. ii) The appellants discharged their burden of proof under Section 123 by producing credible documentary evidence, which was not effectively negated by the Department. iii) Non-compliance with Section 138B vitiated the reliance on statements recorded during investigation. iv) The retracted confessional statements of co-accused cannot be relied upon for confiscation or penalty.
Appeal allowed.
-
2025 (4) TMI 1414
Classification of imported silicon steel scraps - classifiable under Customs Tariff Heading (CTH) 7204 49 00 as claimed by the appellants or under CTH 7225 19 00 as held by the adjudicating and appellate authorities - requirement of import authorization under Para 2.17 of the Foreign Trade Policy (FTP) - redetermination of value of impugned goods from 400$ PMT to 650$ PMT - confiscation - penalty.
Whether the silicon steel scraps imported by the appellants is classifiable under CTH 72044900 as declared by the appellants are under CTH 72251900 as arrived at by the impugned order and as to whether the appellants require import authorization from DGFT in terms of Para 2.17? - HELD THAT:- The report of the Chartered Engineer appointed by the Department itself is categorical in holding that the impugned goods are not scrap in view of the Para 8A of Section XV of the Customs Tariff Act, 1975 which states that metal waste and scrap from manufacture or mechanical working of metals and metal goods definitely not usable as such because of breakage, cutting up, wear and other reasons. The original authority finds that there is variation between the Chartered Engineer certificate and the re-examination report by customs officers; Chapter Head 72.04 excludes articles which can be used for their former purposes or can be adopted for other uses with or without repair or renovation.
Though the classification of the goods shall not depend on the end use, it will be in the fitness of things to view the claim of the importer in the facts and circumstances of each case. In the instant case, the fact that the Chartered Engineer has reported that the such kind of goods cannot be are not re-used directly in the present condition for original purposes and are used as scrap cannot be ignored. Also, the request of the appellant for mutilation gives credence to the claim. Moreover, the impugned goods fulfill the condition of Note 8(a) of Section XV of the Tariff Act, that metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons, in view of the Chartered Engineer Certificate.
The Appellate Authority is not a metallurgical expert to give a finding of this nature, when the Chartered Engineer and the Shed Officer have given categorical report on the condition of the impugned goods. In view of this, we find that the impugned goods are rightly classifiable as "other waste and scrap" falling under CTH 7204 49 00. In any case, the classification determined in the Impugned Order is incorrect as the goods have a width of 0.20 mm to 0.30 mm, i.e. less than 600 mm and mostly grain oriented, taking them out of the ambit of CTH 7225 19 00 - the Impugned Order is liable to be set aside, both the rejection of classification under CTH 7204 49 00 and classifying the same CTH 7225 19 00 are without any basis, reason and evidence.
Re-determination of value as done by the impugned order - HELD THAT:- There was no misdeclaration of classification, no grounds arise for redetermination of the value. The appellants submit that the value of the impugned goods cannot be rejected under rule 12 of the valuation rules and arbitrarily valued at USD 650 per MT; transaction value is not liable to be rejected as it is in consonance with the contract; essential element in valuation is that each transaction has to be assessed independently. The transaction value, under Section 14 of the Customs Act, 1962, is the price actually paid or payable. As per Rule 3(2) of the Valuation Rules, transaction value cannot be rejected except when the circumstances mentioned in the proviso to Rule 3(2) exist. It is not proved that the exceptions exist in this case - there is force in the appellants submission that enhancing the value of the imported goods solely on the basis of the CE report is not one of the methods provided in Valuation Rules, 2007 - the original authority as well as first appellate authority have arbitrarily determined the value at 650 USD per metric ton (C&F) without showing any basis to arrive at the valuation.
Whether the impugned goods are rendered liable for confiscation and the appellant are rendered liable for penalty? - HELD THAT:- On the issue of applicability of BIS certificate for the impugned goods, as per CBEC iinstructions read with the Quality Control Order, 2012, it applies to CTH 7225 1100 or CTT 7226 1100 and not to the impugned goods falling under CTH 7204 49 00. We are of the opinion that for the same reasons, Para 2.17 of the FTP 2009-14 is also not applicable to the impugned goods which are in the nature of Scrap and not second-hand Goods. As there is no mis-declaration of either the classification or the value of the goods, the question of imposing fines and penalties does not arise and therefore, it is not found necessary to discuss the appellants submissions in this regard.
Conclusion - i) The impugned goods are rightly classifiable as 'other waste and scrap' falling under CTH 7204 49 00. ii) The declared transaction value cannot be rejected merely on suspicion or on the basis of the Chartered Engineer's report which does not provide a basis for valuation. The Revenue has failed to discharge the burden of proof to establish undervaluation. iii) There being no misdeclaration or violation of law, the goods are not liable for confiscation under Section 111(d) or 111(m), and no penalty or redemption fine is imposable on the appellants.
The impugned orders are not sustainable and are liable to be set aside - Appeal allowed.
-
2025 (4) TMI 1413
Investigation into the affairs of the respondent company - eligibility to file an application under Section 213 of the Companies Act, 2013 - Illegal allotments of convertible debentures at a discount - illegal increase in authorized share capital of company - conversion of Respondent No. 1 Company from a private to a public entity - Illegal borrowing of funds based on fraudulent documentation - HELD THAT:- Admittedly the appellant is not a member of the Respondent No.1 company, hence cannot allege the business of Respondent No.1 company is being conducted in a manner oppressive to its members; or the company is guilty of fraud, misfeasance or other misconduct towards its members; or members of the company have not been given due information etc. The only argument of appellant is the business of the respondent company is being conducted with an intent to defraud its creditors, though the appellant was unable to substantiate his allegations the creditors of the company are being defrauded. Admittedly the appellant and the Respondent are in money dispute and arbitration proceedings are pending between two. It appears to circumvent such proceedings and to create pressure upon Respondent company, the appellant had filed the present Company Petition seeking investigation into its affairs.
The Ld. NCLT has held the petition is not maintainable under sub-section (a) of Section 213 of Companies Act, 2013 - petition disposed off.
-
2025 (4) TMI 1412
Admission of section 7 application - initiation of CIRP against Corporate Debtor - existence of debt and default by the Corporate Debtor or not - HELD THAT:- The Adjudicating Authority in the impugned order has recorded a categorical finding of existence of ‘debt’ and ‘default’. The Adjudicating Authority also noted in its order that settlement proposal submitted by the CD was rejected by the Financial Creditors - The proceedings in this Appeal also indicate that there has been acknowledgment and acceptance of debt and default and the amount deposited before this Tribunal by the Appellant is also towards the acknowledgment and acceptance of debt and default. There being admitted debt and default, there are no error in the order of Adjudicating Authority initiating the CIRP.
The Hon’ble Supreme Court in GLAS Trust Company LLC vs. BYJU Raveendran & Ors. [2024 (10) TMI 1185 - SUPREME COURT (LB)] has laid down the law that for withdrawal of CIRP, the appropriate course open for the parties to initiate proceedings under Section 12A with Regulation 30A. Thus, for withdrawal of the proceedings, appropriate measures have to be taken under Section 12A and Regulation 30A of the CIRP Regulations before the Adjudicating Authority. By interim order passed by this Tribunal on 18.10.2024, the Committee of Creditors (CoC) could not be constituted by the IRP. In the facts of the present case, the CoC needs to be constituted to find out the claim of the Financial Creditors and to permit the Financial Creditors and other claimants to file their claims and the IRP to collate the claims.
Any proposal submitted by the Appellant, may also include the payment of amount of Rs.369.11 crores deposited in this Tribunal for payment to the Lenders, can be placed by the IRP/ RP before the CoC to obtain the decision. The Members of the CoC at that stage needs to take a decision with requisite vote share, as to whether withdrawal of the proceedings is to be done or not. In the facts of the present case, we are of the view that the amount deposited in this Tribunal of Rs.369.11 crores may await the decision of Adjudicating Authority.
In event the CoC does not accept the settlement proposal of the Appellant, liberty granted to the Appellant to file an Application for withdrawal of the amount deposited in this Tribunal.
Conclusion - i) The Adjudicating Authority's order admitting the Section 7 Application and initiating CIRP is upheld. ii) The CIRP shall proceed with constitution of the CoC and consideration of claims. iii) The Appellant may submit a settlement proposal to the CoC, including the deposited amount, for consideration under Section 12A and Regulation 30A.
The order passed by Adjudicating Authority dated 15.10.2024 admitting Section 7 Application filed by the Financial Creditors is upheld - appeal dispose doff.
-
2025 (4) TMI 1411
Onerous contract under Regulation 10 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Regulations) - Leave and License Agreement - divergence of the opinion between the parties holding the transaction as onerous under Regulation 10 of the Liquidation Regulations, 2016 - Regulation 10 of the Liquidation Regulations, 2016 is beyond the provisions of the IBC and ultra vires to IBC or not.
Divergence of opinion between the two judgements delivered by the Hon’ble Technical Member and Judicial Member - HELD THAT:- udicial Member after considering the submissions of the parties and noticing all relevant facts have come to the conclusion that Leave and License Agreement 07.06.2019 is unprofitable and burdensome and affects the provision of Regulation 10 of the Liquidation Regulation 2016. The facts as noticed above clearly indicates that Leave and License Agreement was entered for rent of ₹5,000 p.m. On a letter sent by liquidator asking the appellant to vacate, appellant himself came with the proposal that he is ready to enter into Leave and License Agreement for amount of ₹2.25 lakhs p.m - The submission which has been pressed by the appellant is that although Technical Member has declared the transaction to be covered by Regulation 10 of the Liquidation Regulations, 2016, however, the Ld. Judicial Member has not found the transaction as onerous.
Regulation 10(1)(b), includes unprofitable contracts thus, Judicial Member has also come to the conclusion that transaction is covered by one of the illustrations given under onerous property in Regulation 10. In paragraph 10 Ld. Judicial Member has obviously referred to Regulation 10(1)(d), which mentioned unprofitable contracts which can be basis for disclaimer of onerous property - the submission of the appellant that there is divergence of opinion between Technical Member and Judicial Member. Ld. Judicial Member has given detailed reason, including the conduct of the corporate debtor and come to the conclusion that the transaction 07.06.2019 was not bona fide and good faith transaction, not accepted.
Thus, both the Ld. Members have expressed the opinion that transaction of Leave and License Agreement dated 07.06.2019 was an onerous transaction covered under Regulation 10, hence there is no error in partly allowing the I.A.2012/2022 by the adjudicating authority.
Regulation 10 is beyond the provisions of the IBC and is ultra vires to the IBC or not - HELD THAT:- Regulation 10 of the Liquidation Regulation, 2016, is thus regulation specified and is fully covered by Section 35(1)(o). Liquidation Regulation has been framed in exercise of powers conferred under various sections of the IBC including Section 34 and Section 35, thus regulations have been clearly framed under Section 35 and as per Section 35(1)(o) liquidator can perform such other function as maybe specified by the board. The power vested in the liquidator by Regulation 10 i.e., disclaimer of the onerous property is thus fully covered by provisions of the IBC and cannot be held to be beyond IBC or ultra vires to the IBC as contented by counsel for the appellant.
Regulation 10 has been framed in accordance with the provisions of the IBC and the Regulation 10 empowering the liquidator to disclaim a contract is well within the statutory powers and the Regulation 10 is fully inconsonance with and is in accordance with the provisions of the IBC and has been enacted to give effect to the provisions of the IBC - thus there are no substance in the submission of the appellant that Regulation 10 is beyond the provisions of IBC.
Conclusion - i) Both the Ld. Members have expressed the opinion that transaction of Leave and License Agreement dated 07.06.2019 was an onerous transaction covered under Regulation 10, hence there is no error in partly allowing the application by the adjudicating authority. ii) There are no substance in the submission of the appellant that Regulation 10 is beyond the provisions of IBC.
There are no error in the order passed by the adjudicating authority - appeal dismissed.
-
2025 (4) TMI 1410
Admission of Section 7 application filed by the IDBI Trusteeship Services Limited - existence of financial debt and default are sufficient to initiate the CIRP or not - requirement of Adjudicating authority to apply his mind - HELD THAT:- The facts indicate that for last more than five years, no payment towards interest or principal has been made. It was principal borrower who has issued debentures and the liability to pay the principal and interest cannot be washed of on the ground that project accounts were to be operated by IDBI Trusteeship Services Ltd.
Reliance placed on the judgement of this Tribunal in Sandeep Jain Vs. IDBI Trusteeship Services Ltd. & Anr. [2025 (2) TMI 522 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB], which was also an appeal filed by suspended director of M/s. Shree Vardhaman Infra Heights Pvt. Ltd., challenging an order admitting Section 7 application filed by the same financial creditor. The submission was raised on behalf of the appellant in the said case that there was project managing committee constituted to monitor the project and project monitoring committee consists of financial creditor who were in majority, hence the corporate debtor could not have been held liable to discharge of the debt. It was held by this Tribunal that the constitution of project managing committee to assist and improve the operation and construction in no manner diminish the obligation of the corporate debtor to fulfil its payment obligation.
Conclusion - There are no substance in the submission that the project account was to be operated under the instruction of IDBI Trusteeship, hence the corporate debtor is not liable for its payment obligation. The present is a case where after receiving the amount by virtue of issuance of debentures in the year 2016 and again in 2021 no payment towards principal and interest have been made. The adjudicating authority has not committed any error in admitting Section 7 application against the principal borrower and the corporate guarantor by the impugned orders dated 29.04.2024 and 07.05.2024.
There are no merit in any of the appeals. Both the appeals are dismissed.
-
2025 (4) TMI 1409
Withdrawal of amount from the Corporate Debtor's bank account during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) - continuing non-cooperation of the Appellants as well as the brazen disobedience of the Appellants - only plea that has been taken by the Appellants to rebut the allegation of abject non-cooperation is illness of the Appellants - HELD THAT:- The Appellant is hit very hard by res judicata with respect to raising the appeal to deposit of ₹32,00,000. The matter has been well settled by the Adjudicating Authority and there are no infirmity in the order.
CA 1253/2020 was preferred during the CIRP stage. Through the filing of IA 2021/2022 by the liquidator the fact of continuing non-cooperation of the Appellants as well as the brazen disobedience of the Appellants vis-à-vis Orders passed by the AA and this Appellate Authority qua wrongful utilisation of ₹ 32 lakhs during the CIRP moratorium are once again reinforced. The IA 2021/2022 was heard and was decided by the Impugned Order dated 16.01.2025 - the Appellants had shown continued non-cooperation during the CIRP and during the liquidation process, and the same is continuing as on date.
The order dated 9th November 2021 has not been challenged before the Appellate Authority and has thus attained finality - there are no infirmity in the orders of the Adjudicating Authority in allowing IA No 2021 of 2022 which prays to direct the suspended Directors to deposit to the account of the Corporate Debtor an amount of ₹ 32 lakhs along with interest at the rate of 12% per annum from the date of withdrawal, in compliance of orders dated 9th November 2020.
Conclusion - The withdrawal of Rs. 32 lakhs during the moratorium declared under Section 14 of the IBC was in violation of the provisions of the Code and the amount along with interest @12% per annum from the date of withdrawal is liable to be deposited into the liquidation estate.
The appeal of the suspended directors dismissed as it is devoid of any merits.
-
2025 (4) TMI 1408
Validity of allotments of residential units made by the Corporate Debtor on the date of commencement of the Corporate Insolvency Resolution Process - authority of Interim Resolution Professional (IRP) to cancel such allotments made on the date of CIRP commencement without issuing any show-cause notice or adjudicatory proceedings - HELD THAT:- The present is a case where IRP who was running the CD as a going concern under orders of this Tribunal, while going through the records of the CD, came to know about the units allotted to the Appellant(s). The RP found that allotments were claimed on 19.09.2019, on which date CIRP had already commenced and there was no authority in the CD, to make any allotment on 19.09.2019. When the CIRP has commenced on 19.09.2019, the jurisdiction of the Suspended Director clearly came to an end and no allotment letter could have been issued on 19.09.2019. The allotment, which is claimed on 19.09.2019 appeared to be unusual, since it was made without receiving any payment in the account of the CD and the payments were received in the account of the CD on 07.12.2019 to 15.01.2020 with regard to the Appellant(s) herein.
The IRP is duty bound to protect the assets of the CD and if it is found that allotment claimed by the Appellant(s) is void, the allotment was impermissible in view of the moratorium imposed on 19.09.2019 and it required no adjudication for treating the allotment as void and impermissible.
The submission of the Appellant is that allotments and payments made by the Appellant are reflected in records of the CD, hence, the allotment was actually made and could not have been declared invalid by the IRP. The materials on the record, including the letter of allotment dated 19.09.2019 in favour of the Appellant without any payment to the designated account, which payment according to the materials on record is claimed to be made only in December 2019 and January 2020, clearly prove that allotment made in favour of the Appellant(s) is non-est and without any authority.
Conclusion - i) The allotment letters dated 19.09.2019, the same day CIRP commenced, were issued by the Suspended Management without any approval or consent of the IRP. The Suspended Management had no authority to allot units on or after the date of CIRP commencement. ii) The IRP did not exercise adjudicatory powers but acted within his duty to protect the assets of the Corporate Debtor under the moratorium. The cancellation communicated to the Appellants was a protective administrative act and not an adjudicatory decision. iii) The Applications filed by the Appellants challenging the cancellation of allotments were rightly rejected by the Adjudicating Authority as the allotments were void ab initio and payments made were not in accordance with the terms and moratorium provisions.
There are no error in the order of the Adjudicating Authority rejecting Applications filed by the Appellant(s). There is no merit in the Appeal. The Appeals are dismissed.
-
2025 (4) TMI 1407
Rejection of Section 7 application - prohibition on deduction of liquidated damages from the final invoices of the Corporate Debtor, in view of approved resolution plan - HELD THAT:- The reliance on the approved Resolution Plan regarding extinguishment of the claim has no effect on the liquidated damages which were already deducted by Hindustan Petroleum Corporation Limited from the invoices as per the terms and conditions of the Purchase Order. When the Resolution Professional was allowed to carry on the contract work after initiation of the CIRP, the said contract has to be carried out as per the terms and conditions and deduction of the liquidated damages from the invoices being part of the terms and conditions for carrying out the contract that cannot be faulted nor any direction after approval of the Resolution Plan can be issued for refund of such liquidated damages. Extension of 12 months is extension for completion of the work and liquidated damages deducted after 16.11.2021 has already been refunded - the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant.
The present is a case where it is not the case of the Hindustan Petroleum Corporation Limited that any claim towards liquidated damages is due on the corporate debtor nor any claim prior to CIRP or during the CIRP was filed. The present is a case where Successful Resolution Applicant after approval of the plan was asking for refund of deducted liquidated damages which deduction was made from invoices during the currency of the contract as per the terms and conditions of the contract - extinguishment of the claims, liquidated damages on account of approval of the plan has no effect on the liquidated damages already deducted as per terms and conditions of the contract. It is true that any claim which was not filed or not part of the Resolution Plan shall stand extinguished on the approval of the Resolution Plan but that does not mean that any liquidated damages deducted during currency of the contract should be allowed to be refunded to the Successful Resolution Applicant.
Conclusion - The Adjudicating Authority rightly rejected the application seeking refund of liquidated damages deducted during the CIRP period.
Appeal dismissed.
-
2025 (4) TMI 1406
Transfer of flats - transfer declared as void and subject to charge - fraudulent transaction under Section 66 of the Insolvency and Bankruptcy Code (IBC), 2016 or not - HELD THAT:- The judgment, which has been relied by learned Counsel for the Respondent in Royal India Corporation Ltd. [2024 (5) TMI 999 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] of this Tribunal supports the submission of Respondent that action under Section 66, sub-section (1) can be taken against any person.
The judgment of this Tribunal in Tridhaatu Kirti Developers LLPi [2023 (1) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] also supports the submission of learned Counsel for the Respondent. There are no error in the judgment of Adjudicating Authority insofar as it has held that transaction of payment of consultancy charges to Appellant Nos.1 and 2 were not bona-fide transaction.
The present is a case where Adjudicating Authority has also held that payments of consultancy charges to the Appellants is fraudulent and in exercise of power under Section 66(1) has directed the said contribution void. We, however, relying on the judgment of Tripura High Court in Smt. Sudipa Nath agree with the submission of the Appellant that Adjudicating Authority could not have declared the Sale Deed in favour of the Appellants dated 21.08.2017, as void - the Sale Deed was obtained by the Appellants of two Flats by payment of consideration of Rs.69,00,000/- each, out of which Rs.55,20,000/- was obtained by loans, and the Lenders, transferred the said amount in the account of the CD and loans having been taken by the Appellants, the Appellants are still discharging the liabilities of the loans - sale transaction in favour of the Appellants could not have been declared void.
Conclusion - The sale transaction in favour of the Appellants could not have been declared void. The sale was made and consideration amount was received in the account of the CD and after receiving the amount, it was transferred. Mere transfer of amount to a related company does not lead to a conclusion of fraudulent sale.
Appeal allowed in part.
-
2025 (4) TMI 1405
Admission of Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) - application was barred by limitation or not - default date and the date of filing - Petition lacked threshold support or not - fraudulent claims and material suppression.
Whether the appeal is time barred or not? - HELD THAT:- The limitation period under the Limitation Act, 1963, is governed by Section 22, which provides that in the case of a continuing breach, limitation runs afresh with each successive instance of default. The Corporate Debtor’s failure to hand over possession of the flats and its continuing default in refunding amounts to the allottees constitute a continuous cause of action. The directions issued by UP RERA from time to time, including the refund order dated 13.10.2020, its amendment on 18.06.2022, and the project registration cancellation on 24.12.2022, reaffirm the subsistence of debt and the ongoing breach by the Corporate Debtor. Furthermore, the acknowledgement of debt in the Corporate Debtor’s balance sheet on 30.06.2022 extends the limitation period under Section 18 of the Limitation Act, 1963. It is to be noted that an acknowledgement of liability within the limitation period gives rise to a fresh period of limitation. Therefore, the present petition, filed on 09.01.2024, is well within time - the Appellant’s contention that the Company Petition is barred by limitation is misconceived.
The present Application which was filed on 19.01.2024 is found to have been filed within the limitation period as per Section 18 of the Limitation Act, 1961 and there are no infirmity in the orders of the AA on this count.
Threshold required under Section 7(1) of IBC - HELD THAT:- It is noted that whether they have obtained recovery certificates or not, the Respondents - Allottees remain Financial Creditors under Section 5(8)(f) of the Code, as they have not received possession of the allotted flats, and their deposited amounts have not been refunded in full. The Corporate Debtor’s claim that certain Applicants have settled their dues is also unsupported, as their outstanding amounts continue to reflect in the Corporate Debtor’s financial statements. Therefore, for the purpose of determining the threshold under the second proviso to Section 7(1) of the Code, Answering Respondent, including those holding recovery certificates, will be considered Financial Creditors.
Whether the Company Petition under Section 7 of the Code has been initiated fraudulently and with malicious intent? - HELD THAT:- The Adjudicating Authority has held that the Corporate Debtor failed to produce any documentary evidence to substantiate its claim that the present proceedings were initiated with fraudulent or malicious intent. The mere fact that some applicants may have obtained recovery certificates does not preclude them from initiating proceedings under the Code, as long as the fundamental criteria of ‘debt’ and ‘default’ are satisfied, which has been established in this case.
This Appellate Tribunal in Monotrone Leasing Pvt. Ltd. v. PM Cold Storage Private Ltd., [2020 (8) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], had held that penal action under Section 65 of the Code can only be taken where there is substantial evidence proving that the insolvency resolution process has been initiated fraudulently or for an ulterior motive.
The proceedings under the Code are summary in nature, and the burden of proving fraudulent intent lies upon the party alleging it. In the present case, the Appellant has failed to produce any cogent evidence to support its allegations. The mere assertion that the applicants are engaging in forum shopping or that some allotments are disputed does not meet the rigorous standard required to invoke Section 65 of the Code. Moreover, even if certain allottees are excluded, the number of remaining applicants still satisfies the statutory threshold, rendering the present application maintainable. In view of the above, the allegation of fraudulent and malicious intent is completely baseless and has been rightly rejected by the Adjudicating Authority. We don’t find any infirmity in the Impugned Order on this count.
The burden of proving fraudulent intent lies with the Appellant and mere assertions by the Appellant cannot be used to invoke penal action under Section 65 of the IBC. There are no material evidence on record to suggest any malicious and fraudulent intent on the part of the Applicants – Homebuyers - In the present case, the total number of units in the project is 247, and the Answering Respondent collectively hold 34 allotted units, thereby meeting the statutory threshold. The Appellant’s objection regarding the eligibility of certain allottees is without merit as the Answering Respondent satisfy the threshold requirement under Section 7(1) of the Code.
Conclusion - i) The petition is not barred by limitation due to continuing default and acknowledgment of debt. ii) The Respondents satisfies the statutory threshold to initiate CIRP. iii) No fraud or malicious intent is established to invoke Section 65 penalties. iv) The Corporate Debtor is liable for pre-existing debts despite conversion. v) The Adjudicating Authority did not err in admitting the petition and initiating CIRP.
Appeal dismissed.
............
|
9911796707
