Approval of Resolution Plan for the Corporate Debtor - all conditions as per section 30(2) of the Code fulfilled or not - HELD THAT:- In order to approve a Resolution Plan u/s.31(1) of the Code, Resolution Professional should examine each Resolution Plan should confirm that all conditions as per section 30(2) of the Code are complied - In compliance with the said conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made thereunder. And these compliances are briefly stated.
The Resolution Plan dated 13th December 2016, which was approved by the CoC on 16-12-2019 for ILC Industries Ltd., submitted by M/s. Karatagi Refineries Private Limited, Resolution Applicant, confirm all the requisite conditions so as to approve it under section 31(1) of Code by the Adjudicating Authority. The Resolution Plan is approved by the CoC with 100% in accordance with law - All the relevant provisions of Code and the rules made thereunder are duly followed by the Resolution Professional and the Committee of Creditors - the said Resolution Plan is a fit to be approved under section 31(1) of the IBC, 2016.
The Resolution Plan dated 13th December, 2019 submitted by M/s. Karatagi Refineries Private Limited (Resolution Applicant) as approved by the Committee of Creditor at 13th meeting held on 16th December, 2019 with 100%, is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Applicant and its employees, members, creditors, including the Central Government, any State Government or any local Authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as such as Authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the instant Resolution Plan - moratorium shall cease to have effect from the date of communication of the order.
Deemed dividend addition u/s 2(22)(e) - Receipt of advances from banks - HELD THAT:- Assessee had to mortgage all his assets to the bank in order to increase the credit facility of the company and therefore, advance taken by the assessee should not be treated as deemed dividend. For that we rely on the judgment of the jurisdictional Kolkata High Court in the case of Pradip Kumar Malhotra vs. Commissioner of Income Tax [2011 (8) TMI 16 - CALCUTTA HIGH COURT] on similar identical facts has held that “for retaining the benefit of loan availed of from the bank, if decision is taken to give advance to the assessee, such decision was not to give gratuitous advance to its shareholder but to protect the business interest of the company. That is, if such loan or advance is given to such share holder as a consequence of any further consideration which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act.
Therefore, we do not find any infirmity in the order of ld CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition.
Reopening of assessment u/s 147 - validity of reopening of assessment - HELD THAT:- Reassessment proceedings were initiated by AO after four years without bringing and tangible material on record. The issue on which the reassessment proceedings were initiated by AO was already existed during the original assessment. Loan interest was paid by assessee and the said interest was claimed and during the original assessment the same was disallowed by AO while passing the original assessment under section 143(3) - in the assessee's case under consideration the reassessment proceedings was based on review of the same set of facts/details which were already on record before AO at the time of completion of original assessment under section 143(3) - AO has merely reviewed the same set of documents and concluded that that there was escapement of tax which is not tenable.
AO cannot reopen a concluded assessment merely on reviewing the documents which are already filed before the AO during the original assessment.SeeCIT -vs.- Kelvinator of India [2010 (1) TMI 11 - SUPREME COURT]
We quote section 147 1st proviso to conclude that the Revenue has not made out a case of the assessee having not “fully” and “truly” disclosed all particulars at the first instance as per Hindusthan Lever Ltd. vs. R.B. Wadker[2004 (2) TMI 42 - BOMBAY HIGH COURT] - Decided in favour of assessee.
Accrual of income - undisclosed contract receipt - difference in income declared by the assessee and income represented in form 26AS - Liquidated Damages for belated execution of the contract - Whether should be allowed as an expense from the alleged contract receipt - HELD THAT:- Difference above is representing the liquidated damages deducted by the Gujarat Council of primary education.
AO was very much aware of the address of Gujarat Council of primary education. In case of any doubt, it was the duty of the AO to take the confirmation from the Gujarat Council of primary education. But we note that none of the authorities below has used the powers given under section 133(6) and 131 of the Act to verify the contention of the assessee.
As referred the bank statement of the assessee and found that the exact amount of payment received as approved in the bills was reflecting therein. Thus it is clear that there was nothing received by the assessee over and above the bills approved by the Gujarat Council of primary education.
No allegation of the Revenue that the assessee has received the amount of difference as discussed above outside the books of accounts.
The books of accounts of the assessee during the relevant period were audited, and no defect of whatsoever was pointed out by the auditor of the assessee. There cannot be any addition merely on account of the difference between the income shown by the assessee in its financial statements and income shown in the form 26AS. In holding so, we find support and guidance from the order of Ravindra Pratap Thareja [2015 (10) TMI 1487 - ITAT JABALPUR] wherein held that merely because a payment is reflected in AS-26 and is shown to have been made to the assessee, it cannot be brought to tax in his hands when the said money is not received by the assessee.
Even if the said difference is treated as the income of the assessee, then also it is entitled to claim the same amount of liquidated damage as expenses under section 37(1) resulting no tax liability in the hands of the assessee. See MAZDA LTD. [2017 (9) TMI 1038 - GUJARAT HIGH COURT] - addition deleted - Decided in favour of assessee
Disallowance of payment made to the subcontractor - notices issued under section 133(6) of the Act were not either served to them or there was no compliance - AO held that the payment made by the assessee was not representing the genuine transactions - HELD THAT:- Assessee has furnished the copies of the PAN of all the parties along with the jurisdiction. Thus we are of the view that the AO before holding that the payment made by the assessee is not genuine, he should have verified from the respective AO having jurisdiction over the assessee. But the AO failed to do so.
Assessee has filed the copies of income tax return acknowledgment along with the computation of income in the case of Shri Mahammed Husen Syed
Assessee has made payment to Nimesh builders and Mahammed Husen Syed after deduction of the TDS. The assessee in respect of these parties has also filed the confirmation.
Addition was made by the AO on the ground that notices under section 133(6) of the Act were either not served or served, but no compliance was made - AO was in possession of the PAN of all the parties along with the jurisdiction then before making any disallowance it was the duty of the AO to verify the same from the AOs having jurisdiction over the assessee.
AO did not doubt the reasonableness of the expenses. Thus in our considered view, the other details filed by the assessee cannot be just brushed aside without any cogent reasons to conclude that the expenses claimed by the assessee are not genuine. In view of the above, we reverse the order of authorities below. Accordingly, we set aside the order of learned CIT (A) and direct the AO to delete the addition made - Decided in favour of assessee.
Deduction u/s.35(1)(ii) - assessee has made donations to the “The School of Human Genetics and Population Health” - HELD THAT:- As observed by the survey team that this institute in connivance with donors, brokers and accommodation entry providers has indulged in a duvious scheme of tax evasion, under which bogus donations were received from donors and money used to be returned back to the donors in lieu of commission, even while the donor availed of deductions u/s.35(1)(ii) of the Act. The registration of the institution was cancelled by the Government of India with retrospective effect and it was held that the institution has misused the exemption. However, under similar facts and circumstances, various coordinate benches have taken the view that mere admission on the part of the office bearers of the body/trust, the assessee cannot be penalized and the amount of donations claimed by the assessee on account of payment to the said school cannot be denied.
As decided in NARBHERAMVISHRAM GUA VERSUS DCIT, CENTRAL CIRCLE-4 (2) , KOLKATA [2018 (11) TMI 1314 - ITAT KOLKATA] no provision for withdrawal of recognition u/s 35(l)(ii) of the Act. Hence we hold that the withdrawal of recognition u/s 35(l)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1 )(ii) - Decided in favour of assessee.
Disallowance of Bad Debts written off - allowability of Bad Debts u/s 36(1)(vii) r.w.s. 36(2) - Whether limited to the head of income from business and profession even though such amount earlier taxed as a capital gain? - HELD THAT:- Entries being routed through P&L account does not entitle to be claimed as a bad debts or business loss for the simple reason that irrespective of whether these entries in the revenue field or capital field in terms of requirements of the Companies Act, it is to be routed through P&L account nevertheless.
It is only elementary that what can be allowed as bad debts or business loss is only put in the revenue filed in connection with the business operation.
Substance in the actions of the authorities below and concur with the views so taken by the authorities below that the loss in question cannot be allowed as a bad debts or business loss. Having said that, however, we see merits in the plea of the learned counsel that once it is not in dispute that loss has indeed incurred even if it is not in the revenue field or bad debts, the same should be considered by the AO for being allowed in the capital filed.
AO having rejected the case of the assessee for the loss in the revenue field, it is only corollary thereto that as long as it is a genuine loss, as undisputed facts of the present case clearly indicate, the loss is to be treated as loss in the capital field, and the matter is to be examined further from that angle - this aspect of the matter is not at all examined by the Assessing Officer - we remit this issue to the AO for examination of the alternative claim of the assessee that the loss be allowed as capital loss - Assessee's appeal is allowed for statistical purposes
Addition u/s 41 - Cessation of liability - sundry creditors towards whom the assessee had not repaid - Tribunal deleted the addition and noted that the assessee was unable to repay the creditors because of weak financial position and further that the assessee had never completely stopped making repayments - HELD THAT:- It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased.
Going by this logic itself, the Assessing Officer, in our opinion, committed an error invoking Section 41(1) of the Act. Further the assessee had produced additional evidence on record before the Appellate Authority after following the procedure and pointed out that substantial portion of the debt was cleared in later assessment years. - Decided agaist revenue.
Stay of demand - petitioner point out that the petitioner has not raised some of the relevant grounds in the appellate memorandum and permission may be granted to ensure that additional memorandum of grounds is filed by the petitioner in pursuance of the appeals filed as per Exts.P7 and P9 - HELD THAT:- Petitioner may file additional memorandum of grounds in support of their Exts.P7 and P9 appeals as well as Exts.P8 and P10 stay applications, which the petitioner may appropriately file before the 2nd respondent appellate authority without much delay preferably within a period of ten days from the date notified for receiving a certified copy of this judgment.
Additional memorandum of grounds is duly filed by the petitioner as aforestated, then the 2nd respondent appellate authority shall treat those additional grounds as part and continuation of the appeals and stay applications as already filed. 2nd respondent may afford reasonable opportunity of being heard to the petitioner on the matters raised in Exts.P8 and P10 stay applications and orders may be passed on those stay applications without much delay preferably within a period of six weeks from the date of filing of the aforestated additional memorandum of grounds. It is only for the purpose of preservation of the subject matter of the lis, it is ordered that until orders are passed on Exts.P8 and P10 stay applications as aforedirected, further coercive steps for enforcing the impugned order may be kept in abeyance.
Aforesaid directions have been issued by this Court only for the purpose of preservation of the subject matter of the list and shall not be construed in any manner as an opinion on the part of this Court.
Disbursement of loans to accused without prior sanction of the Registrar of Companies - contravention of section 295 (4) of the Companies Act - time limitation - HELD THAT:- In the case of Srikumar Menon and Ors. vs. Registrar of Companies [2012 (6) TMI 5 - HIGH COURT OF CALCUTTA], a show-cause notice was sent under section 295(1C) of the Act. An application was filed under section 633(2) of the Companies Act, where without permission of the Central Government, intercorporate deposits were created. For such violation, conviction prescribed was maximum imprisonment of 6 months for the offender. The complaint was filed, however, objection was raised on the ground that it was barred by limitation under section 468 of the Code of Criminal Procedure.
In Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors. [2003 (2) TMI 31 - BOMBAY HIGH COURT], the complaint was filed for delay in remitting the tax deducted. The applicant has taken stand that he was nonexecutive Director of the company and they are also practising advocates and, therefore, they are prohibited under the law to act as full time directors - The status of the applicant/accused in the case of Homi Phiroz Ranina & ors. vs. The State of Maharashtra & ors., is similar to the status of the petitioner in the case in hand. The applicant is also a practising advocate and solicitor. So, he could only act as non-executive Director unless specific material is brought on record, the liability of a principal or active Director cannot be fixed on him - Admittedly, he is not a signatory to the cheque, which is the subject matter of the complaint.
The other point in respect of the status of the petitioner as an active partner and was having knowledge of not taking prior approval for disbursement, is not made out in the averments. A specific role is attributed to accused Nos.1 and 2. Accused No.2 is a Managing Director and therefore, he has signed the cheque. The petitioner had not signed the books of accounts but he has signed the balance sheet - on the basis of only signature, it cannot be said that there is enough material to show the knowledge of the petitioner of disbursement of the loan without prior approval. A significant circumstance also to be addressed to is that the accused Nos.1 and 2 are the Directors of those companies in whose favour the loans were disbursed. Thus, the accused Nos.1 and 2 had direct interest in the disbursement of loan. There is nothing to show that the petitioner has any interest or any connection with the other two companies - no case is made out to issue process under section 295 (4) of the Companies Act, 1956 is made out to swaddle the vicarious liability on the petitioner.
The process issued by the learned Magistrate under section 295 (4) of the Companies Act, 1956 on 24.5.2002 and the summons dated 3.11.2015 are quashed and set aside.
Constitutional Validity of Section 174 of the KSGST Act - time limitation - vires of the state's legislative power or on the ground that the demand is barred by limitation under Section 25(1) of the KVAT Act - HELD THAT:- The issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [2019 (2) TMI 300 - KERALA HIGH COURT] where the petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017.
Levy of fees charged u/s 234E - intimations issued u/s 200A - HELD THAT:- Finding ourselves as being in agreement with the view taken by the Tribunal in the case of Tata Rice Mills [2017 (10) TMI 1504 - ITAT AMRITSAR] hence are of the considered view that the ACIT-TDS, CPC Ghaziabad in the case before us had erred in levying fees under Sec.234E in respect of tax deducted at source for the four quarters prior to 01.06.2015 in respect of A.Y. 2015-16. We thus not being persuaded to subscribe to the view taken by the CIT(A) who had upheld the levy of fees by the A.O, thus set aside his order and vacate the demand raised by the A.O under Sec.234E in the hands of the assessee for all the four quarters for the year under consideration.
Unexplained credits u/s 68 - Whether assessee has discharged its onus of proving necessary ingredients of section 68 i.e., the identity, genuineness and credit worthiness of the depositors? - HELD THAT:- As perused the information on record in respect of the aforesaid 17 parties from whom the assessee had claimed cash loans. It is noticed that in respect of some of the parties the assessee has filed only confirmation letters. On perusal of the material on record it is noticed that assessee has not filed complete information i.e. in respect to cash loan from Madhu Kedia it is stated that she has been serving in a company at Kharshila (Rajasthan) however vague address of the lender was given as station Road Kharshila Chhatigarh. As observed that because of incomplete information, it is not feasible for the assessing officer to carry out verification and investigation to prove the genuineness of the transactions. These material facts demonstrate that assessee has failed to prove the basic requirement of section 68 by not establishing the identity, genuineness and creditworthiness of the impugned transaction with relevant basic material.
In the case of Shivam Patel from whom the cash loan was shown the assessee has not furnished any detail.
For the reasons stated above in this order for want of proper relevant material the assessee failed to prove the identity of the persons genuineness of the transactions and creditworthiness of the persons therefore unexplained deposits ( ₹ 158,500+ ₹ 1,68,000 + 13,300) to the amount of ₹ 3,39,800 is treated as unexplained and added to the total income of the assessee.
Four persons from whom the assessee has claimed loan of ₹ 66,500/- the assessee has furnished confirmation letters and PAN of the depositors. The assessing officer had not allowed the claim of the assessee on the ground that copies of return of income, bank statement , source of income were not furnished to prove the identity of the person, genuineness of the transactions and creditworthiness of the depositors. We observe that in these four cases the assesse has taken loan of Rs. (18500, 10,000, 19000 & 19000) totaling to ₹ 66,500/- and the PANs of the depositors have been furnished. In the cases of these four persons, assessing officer should have made further verification as the identity and addresses of the persons were available in the PAN of such persons. Considering these facts, we allow the claim of the assessee in respect of the loan amount ₹ 66,500/-.
In respect of unsecured loan of ₹ 98,000/- claimed to be received from Shri Harish Soni, it is noticed that the aforesaid person has confirmed the granting of unsecured loan to the extent for ₹ 49,000/- only as against ₹ 98,000/- claimed by the assessee.
In respect of Rashmin Patel the assessee has claimed loan advance of ₹ 1,97,000/- and ₹ 49000/ respectively. However, the said party has not confirmed the advance to the amount of ₹ 49,000/-
After considering the contention of the assessee that the depositors have inadvertently mentioned the wrong amount in the confirmation letters we consider it appropriate to restore this issue to the file of the assessing officer for deciding afresh after examination of the information to be produced by the assessee.
In respect of advance of ₹ 1,81,000/- form Shri Harin Pandit Soni in cash against sale of car in support of which the assessee has submitted a confirmation letter from Harish P Soni showing cash receipt of ₹ 1,81,000/- on 15/07/2010 and payment back on 05-03-2011 due to cancelation of deal. It is noticed that assessing officer has not disproved these material fact with any cogent material and disallowed the impugned amount on assumption basis, therefore, the claim of the assessee on this issue is allowed. - Decided partly in favour of assessee.
Disallowance of expenses - assessee has failed to produce the books of accounts and supporting evidences to substantiate the claim of expenses - HELD THAT:- The assessee has claimed various expenses to the amount of ₹ 2,01,357/- against the gross income of ₹ 6,60,768/-. In the absence of supporting details, the assessing officer has disallowed 100% of these expenses, however, the ld. CIT(A) has restricted the disallowance to the extent of 50% of such expenses. After considering the gross income and nature of business of the asssessee, we observe that it would be reasonable to disallow 25% of such expenses for want of proper supporting material in the case of assessee, therefore, we restrict the disallowance to the extent of ₹ 5,04,00/-. Accordingly, the appeal of the assessee on this issue is partly allowed.
The Gujarat High Court admitted the case and identified the substantial question of law regarding Cenvat credit entitlement for additional duty of Customs paid under the Customs Tariff Act, 1975.
Whether the goods namely Acid Slurry (organic surface active agent) falling under Chapter heading 3402.90 of Central Excise Tariff is eligible for exemption N/N. 88/88 dated 01.03.1988 which exempts synthetic detergents vide Sr. No.26 of the table attached to the notification? - it was held in the case that All synthetic detergent which are sold in the market is a formulation of Acid Slurry and various inputs such as sodium carbonate, dolomite powder, perfume and colour etc. Therefore there is a difference between Acid Slurry and synthetic detergent.
HELD THAT:- Impugned order upheld - appeal dismissed - decided against appellant.
Classification of imported goods - DC Motor which is performing dual function i.e. of DC Motor and of rear wheel - main principal and dominant function of the imported goods - Whether the DC motor imported classifiable under tariff item 8501 3119 as claimed by appellant or under tariff item 8714 1090, as held by Revenue? - it was held by CESTAT that the main dominant and principal function of the impugned goods is electric motor. Therefore, the same merits classification in tariff item 8501 3119 as classified by the appellant.
There are no reason to interfere with the impugned order - appeal dismissed - decided against appellant.
Validity of Section 174 of the KSGST Act - vires of State's legislative power - time limitation under Section 25(1) of the KVAT Act - HELD THAT:- The issue covered in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [2019 (2) TMI 300 - KERALA HIGH COURT] where The petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017.
Validity of Section 174 of the KSGST Act - time limitation - HELD THAT:- The issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [2019 (2) TMI 300 - KERALA HIGH COURT] where The petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017 - petition dismissed by applying the ratio of the said case.
Maintainability of petition - initiation of CIRP - Financial Debt - HELD THAT:- The Applicants sent notices demanding repayment of the amount, and even though a reply dated 02.11.2017 was received from the Corporate Debtor it is seen that no valid grounds have been out forth by the Corporate Debtor to stave off the claim and the reply it is seen is rather evasive. The Tribunal is hence of the view that the loan was due and payable when the repayment was demanded and since there has been no repayment till date there is default in repayment of the financial debt and that a default has been committed in terms of Section 3(12) of the Code of a financial debt as defined under Section 5(8) of the Code and that the Applicant has rightly invoked the provisions of the Code.
It is also seen from the Application that the above named IRP has given a written consent in Form 2 wherein he has agreed to accept appointment as an IRP if Application is admitted. Further, it is also evident from the said Form 2 as filed by the IRP signed under his hand that he is not a related party to the Corporate Debtor and that he is eligible to be appointed as an independent director on the Board of the Corporate Debtor - Certificate of registration of the IRP as issued by the Insolvency and Bankruptcy Board of India (IBBI) and self attested has also been enclosed along with the Application by the proposed IRP and taking into consideration all the above, this Tribunal finds that this is a fit case to be admitted in terms of Section 7 of the Code and thereby initiate corporate insolvency resolution process as against the Corporate Debtor.
Application to set aside the ex-parte order dated 28.12.2018 initiating the CIRP against the Corporate Debtor - HELD THAT:- In view of the application being filed for setting aside the ex-parte order initiating CIRP and appointing IRP. Let CIRP process be stayed till disposal of this application and IRP to not to take any steps in furtherance of the CIRP.
Maintainability of application - initiation of CIRP - Corporate DEbtor failed to make repayment of its debt - existence of debt and dispute or not - Time Limitation - HELD THAT:- Both the parties have waited for more than 6 years to raise the issue again to settle the old disputes. Admittedly, the respondent ceased to manufacture IMFL for the petitioner since November, 2012. Therefore, laches and limitation applies for both the parties. And now it is settled position of law that law of limitation applies for invoking provisions of Code.
The hon'ble Supreme Court of India, in the case of B. K. Educational Services P. Ltd. v. Parag Gupta and Associates [2018 (10) TMI 777 - SUPREME COURT], has examined the issue of applicability of provisions of the Limitation Act, 1963 to the provisions of the Code. Therefore, the case is also barred by laches and limitation.
Existence of debt and dispute or not - HELD THAT:- The impugned demand is not only disputed, but it is also not established with supporting documents, and it is also barred by laches and limitation. The law on issue as discussed above is also against the petitioner. Therefore, the petitioner failed to make out any prima facie case to admit the instant case and it is liable to be rejected.
Corporate Insolvency Resolution Process - existence of dispute’ between the Appellant/Operational Creditor and the Respondent/ Corporate Debtor - disputes existed inter-se the parties even prior to issuance of Demand Notice under Section 8 of I&B Code with respect to deficiency in services rendered - it was held by NCLT that the Respondent/ Corporate Debtor has been able to demonstrate that a pre-existing dispute in regard to deficiency of service was in existence when the demand notice under Section 8(1) of I&B Code was issued by the Appellant/ Operational Creditor. The Adjudicating Authority did not err in noticing the same.
HELD THAT:- There are no reason to interfere with the impugned order dated 19th July, 2018 passed by the National Company Law Appellate Tribunal at New Delhi - there are no merits in the appeal - appeal dismissed.
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