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Showing 461 to 480 of 754 Records
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2020 (5) TMI 294
Invocation of Bank Guarantee - petitioner intends to approach the NCLT and seeks an injunction against the IOCL from encashment/invocation of the bank guarantees, forming subject matter of this writ petition, but that, owing to the lockdown, announced by the Central Government, consequent upon the n-COVID-2019 crisis, which is to continue in force till 3rd May, 2020 as of now, he is not in a position to do so - HELD THAT:- Issue notice to the respondents to show cause as to why rule nisi be not issued.
Renotify on 10th June, 2020 before the Roster Bench.
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2020 (5) TMI 293
Invocation of Bank Guarantee - petitioner unable to approach this Court due to COVID pandemic situation - petitioner only seeks a limited amnesty for his client by way of a restraint against the IOCL, from encashing the aforesaid three bank guarantees, till expiry of one week from lifting of the lockdown, imposed by the Central Government, which is presently in force till 3rd May, 2020 - HELD THAT:- This writ petition is disposed of by granting limited relief, to the petitioner, to the extent that, till the expiry of period of one week from the lifting of the lockdown, imposed by the Central Government, consequent to n-COVID-2019 pandemic, the IOCL shall remain injuncted from encashing/invoking the aforesaid three bank guarantees, i.e. Bank Guarantee No. 0346415BG0000105 dated 9th December, 2015 for an amount of ₹14,73,82,051/- issued by Respondent No. 2, Bank Guarantee No. 160127IBGA00005 dated 25th February, 2016 for an amount of ₹ 29,47,64,102/- and Bank Guarantee No. 160127IBGA00014 dated 19th April, 2016 issued by Respondent No. 3 for an amount of ₹49,44,58,134/-, till the expiry of one week from the lifting of the lockdown imposed by the Central Government, which is presently in force till 3rd May, 2020.
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2020 (5) TMI 292
Oppression and mismanagement - Approval of Resolution Plan - allotment of equity shares to Respondent No.6 - whether the Resolutions passed during Board of Directors meeting of Respondent No. 1, held on 23rd January 2019, authorizing and allotting the impugned allotment of 1,89,000 shares to Respondent No. 6 is in accordance with law or not? - whether the impugned Sale Deed dated 26th September, 2018 is to be oppressive and seriously prejudicial to the interests of the Company? - Whether the Petitioners are entitled for their appointment as Directors. If so, what is the relief the Petitioners are entitled for?
HELD THAT:- It is not the case of Petitioners that their original shareholdings have been reduced but by virtue of the impugned allotment of shares to the Respondent No. 6, their percentage of shares in the Company stand reduced - The impugned allotments of shares do not suffer any legal impediment and thus it should be upheld to be legal. The Petitioners in the absence of any Agreement cannot demand to appoint them as Directors of the Company, as matter of right, and this issue was already dealt with by the Company at appropriate levels.
And there is no requirement of shares to hold to become Directors of the Company, as per Articles of Association Company. And other reliefs as asked for are devoid of merits. The Petitioners failed to make out case that the Affairs of Company being conducted in a manner prejudicial or oppressive to the Petitioners or to the Company so as to invoke jurisdiction of this Tribunal under the extant provisions of Companies Act 2013. As detailed supra, the affairs of Company is being successfully run by the stewardship of Respondent Nos.2 & 3 and earning adequate profits and distributing substantial dividends.
Subsequent to the filing of main Company Petition, I.A.No.649 of 2019 filed by the Petitioners, under Rules 11 & 34 of the NCLT Rules, 2016, by inter alia seeking to permit them to implead the proposed Seventh Respondent Company i.e. M/s. AKP Foundries Private Limited in the present proceedings. Since, the Tribunal finds that the main Petition itself lacks merits, there would not serve any purpose to allow the impleading Application.
The instant Company Petition lacks of merits and thus it is liable to be dismissed - petition dismissed.
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2020 (5) TMI 291
Duties of IRP - collation of claims of "financial creditors", "operational creditors", etc., both domestic and international - control and custody of all the assets over which the "corporate debtor" has ownership rights - HELD THAT:- In view of such duties empowered on the "interim resolution professional", he is required to collate the claim of all "offshore creditors" or take control and custody of the assets of the "corporate debtor" situated outside India (in Holland) or other places, but for giving it effect the "resolution professional" is required to reach an arrangement/agreement with the administrator appointed pursuant to the proceeding initiated at Holland.
The question as to whether the "committee of creditors" have any role to play is left open for decision at appropriate stage/in an appropriate case but for the present, we allow the "committee of creditors" to guide the "resolution professional" to enable him to prepare a (draft) agreement showing the terms and conditions to take up the matter with the administrator of Holland for his consent.
Post the case for "orders" on September 20, 2019 at 12.00 noon on the top of the list.
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2020 (5) TMI 290
Refund of service tax - retrospective exemption - Period of limitation of 6 months - amount which was collected by the service provider SIPCOT (State Industries Promotion Corporation of Tamil Nadu Ltd., A Govt. of Tamil nadu Undertaking) on development charges - Department was of the view that the refund claimed ought to have been filed within six months from the date on which Section 104 of Finance Act, 2017 was introduced and received assent of the President - HELD THAT:- The issue decided in the case of M/S. TEKNOMEC VERSUS COMMISSIONER OF GST &CENTRAL EXCISE, CHENNAI [2019 (7) TMI 1416 - CESTAT CHENNAI] where it was held that rejection of refund claim on the ground of time bar is unjustified - rejection of refund set aside - appeal allowed - decided in favor of appellant.
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2020 (5) TMI 289
Maintainability of Arbitral Award - outstanding dues in respect of the supply of Smart Cards made by the Petitioner to the Respondent - differential tax deposited by the Petitioner due to non-issuance of Sales Tax 'C' Forms by the Respondent alongwith interest - unutilized 49,500 Red Pre-printed Smart Cards/ White Smart Cards - non-procurement of referral Authentication Kits (RAKs) by the empanelled medical facilities - reimbursement of the costs/ expenditure incurred by the Petitioner in providing services to the Respondent for the period 1.06.2015 to 8.07.2015.
Recovery of a sum of ₹ 30,239/- being the amount of outstanding dues in respect of the supply of Smart Cards made by the Petitioner to the Respondent - HELD THAT:- No patent illegality can be found in the rejection of the said claim except to the extent of ₹ 2025/- which has been allowed towards the claim payable by Regional Centre, Hissar. It was for the petitioner to lead evidence to show that the invoices being filed in support of the claim pertained to the claim amounts, as also to show that the Smart Cards were actually delivered. In most of the claims under this Head, the petitioner failed to connect the invoices filed, with the amounts claimed while with respect to Regional Centre, Lucknow, the petitioner could not rebut the evidence of the respondent that the Smart Cards were even received - this part of the Award calls for no interference in judicial review by this Court under Section 34 of the Act.
Recovery of a sum of ₹ 80,77,215/- on account of the differential tax deposited by the Petitioner due to non-issuance of Sales Tax 'C' Forms by the Respondent alongwith interest thereon @ 21% from the date of deposit till 28.02.2017 to the tune of ₹ 1 0587373/- - HELD THAT:- There is no evidence for proving the Sales Tax Challans filed by the petitioner and nor were the originals produced. The deposition of PW-1, Rajendra Yadav, is noted wherein he admits that the amounts indicated in the Challan do not exclusively relate to the Smart Cards supplied to the respondent and also relate to the other parties as well - The Tribunal has come to a finding that the respondent is not a ‘dealer’ under Section 2(b) of the Act nor a ‘registered dealer’ with the Sales Tax Department under Section 7. Respondent has been established by the Ministry of Defence for providing Contributory Health Scheme to the beneficiaries under the Scheme and is not in any business so as to be termed as a registered dealer for selling or buying cards. The Tribunal also observes that the Smart Cards supplied to the beneficiaries will not be termed as a sale or a resale under the Act. Respondent was, therefore, not liable to give any Form ‘C’ to the petitioner - Claim rejected.
Recovery of a sum of ₹ 66,89,250/- on account of unutilized 49,500 Red Pre-printed Smart Cards/ White Smart Cards - HELD THAT:- The Award suffers from no illegality leave alone a patent illegality. The respondent herein is right in its contention that the Agreement clearly underscored the need of the parties to stop the work in the last month of the Contract and hand over the software and the hardware to the respondent. The admitted position was that the petitioner required 25 days to deliver the cards towards any application approved and sent to it. Thus, on a given date in a given month, the Cards which were delivered were naturally ordered atleast 25 days prior thereto. The respondent had vide its email dated 28.04.2015 clearly reiterated that the Agreement would expire on 31.05.2015 and they had no intent to extend it beyond the said date. No applications as admitted by the petitioner were approved in the month of May 2015. Thus, the contention of the petitioner that it had suffered loss due to the unutilized cards on account of the act of the respondent is misplaced.
Recovery of a sum of ₹ 2,97,67,500/- on account of non-procurement of referral Authentication Kits (RAKs) by the empanelled medical facilities - HELD THAT:- The Tribunal in its wisdom has interpreted the word ‘facilitate’ to signify recommendation or suggestion and not imposing or mandate. It is no longer res integra that interpretation of the Clauses of the Contract is the domain of the Tribunal. The Tribunal has given a particular interpretation to the Clause and in my view this is not only a possible but a plausible view requiring no interference. I find merit in the contention of the respondent that surely the respondent could not impose itself on the hospitals to procure the Kits from the petitioner. This was neither the mandate nor the obligation under the Contract nor can even be sustained in any commercial transaction or in the business common sense.
Recovery of a sum of ₹ 4450440/- as reimbursement of the costs/ expenditure incurred by the Petitioner in providing services to the Respondent for the period 1.06.2015 to 8.07.2015 - HELD THAT:- Having raised a claim, the onus of proving that the services were rendered by the petitioner was on the petitioner itself. Petitioner could not place any order on record by which the respondent had sought its services beyond the contractual period. On the contrary, Annexure C-19 was an email dated 28.04.2015 issued by the respondent to its Regional Centres, with a copy to the petitioner, that the petitioner should return all the hardware and software to the ECHS, in compliance with Clause 9.1.3 of the Agreement - also, this Claim was in clear contradiction to the claim for unutilized Smart Cards. On one hand, the petitioner complained about withholding the applications which proved that the Contract was to end on 31.05.2015 while on the other hand, it urged that it worked beyond the contractual period. RW-1 had clearly deposed and proved the email dated 28.04.2015, but no attempt was made by the petitioner to demolish the testimony of the witness, in cross-examination.
This Court finds no reason to interfere with the said Award, there being no patent illegality or perversity - petition dismissed.
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2020 (5) TMI 288
Transfer of cases relating to MPs and MLAs to the Special courts for fast tracking - HELD THAT:- When there are directions with specificity from Hon’ble Supreme Court to constitute / designate courts at both Sessions and Magisterial levels (that too as many courts as required), after having understood the same correctly and after having constituted / designated courts also in the same manner, non designating the lone Metropolitan Magistrate Court in Chennai alone particularly when Hon’ble Supreme Court had made it clear that as many courts as necessary, deemed fit and expedient have to be constituted / designated at both levels deserves a closer examination. This court is constrained to make this observation as the lone reason for non designating the II Metropolitan Magistrate is work load and the perception that said court may not be able to allocate time to hear cases involving M.Ps / M.L.As on day to day basis.
According to fourth respondent, there were no magisterial offences / cases in this category as of 05.03.2019. Be that as it may, a simple way out would have been to constitute / designate more courts at magisterial level, as Hon’ble Supreme Court has already given directives with specificity in this regard. To be noted, even today, it is submitted without any disputation that Courts of Judicial Magistrates which were designated / constituted in 31 judicial districts for trying cases involving M.Ps / M.L.As are still functioning. Therefore, 6.9.2019 letter / communication of fourth respondent, third respondent acting on the same and making G.O.Ms.No.535 dated 11.10.2019 are presenting some difficulty. Notwithstanding clear / specific directives from Hon’ble Supreme Court, if and if at all non designating lone Metropolitan Magistrate Court in Chennai alone had become imperative / inevitable, ideally, third and fourth respondents could have approached Hon’ble Supreme Court and sought suitable directives. Admittedly, this was not done.
This Court deems it pertinent to mention that there is no submission / explanation, much less material regarding why more Metropolitan Magistrates in Chennai were not designated (as per directives of Hon’ble Supreme Court, i.e., as many as deemed necessary at Sessions and magisterial levels) though this Court is informed that there are more than 20 Metropolitan Magistrates courts in Chennai. However, considering the scope of cases on hand, this court refrains itself from dilating further into this aspect of the matter.
There is no explanation, much less even plausible explanation that is being put forth for not transferring the petitioners’ cases to Court of II Metropolitan Magistrate.
For Court of Sessions taking cognizance of a case without committal by a Magistrate, there are only two exceptions. One exception is an express provision in Cr.P.C in this regard and the other is any express provision in this regard in any other law. An express provision if any can at best be considered to be one under Section 280B(a) of IT Act, which talks about Special Court. The question of cases on hand being heard by a special court will arise only if so designated as mentioned in section 280A of IT Act. A perusal of section 280B of IT Act makes it clear that offences become triable by Special Court ‘if so designated’, but, no such designation has been made as far as Tamil Nadu is concerned. Therefore, lack of original jurisdiction for Sessions Court argument is saved by Ranbir Yadav principle though ideally, transfer could have been made to II Metropolitan Magistrate Court - a perusal of section 26 of Cr.P.C makes it clear that offences on hand are triable by Magistrate courts. Absent Special court under Section 280A of IT Act, section 26 of Cr.P.C operates and section 26 of Cr.P.C more particularly, subsection (b) of section 26 makes it clear that offences on hand which are ‘offences under any other law’ are triable in accordance with the First Schedule to Cr.P.C.
Ideally, either more number of Magistrate Courts should have been designated or Hon’ble Supreme Court should have been approached for suitable directions. This turns on fundamental principle of discipline in hierarchy of Courts. Therefore, the argument that transfer has the trappings / is traceable to Article 227 and Section 407 Cr.P.C is an argument which not only does not impress this Court, but it is an argument which cannot even be countenanced.
With regard to the argument that petitioners were neither M.Ps / M.L.As nor former M.Ps / M.L.As on the date of alleged offence or on the date of launching complaints, as Hon’ble Supreme Court has directed all pending cases to be transferred, this argument fails - Likewise, the argument that only one of the petitioners has become an M.P is of no avail to petitioners, as Hon’ble Supreme Court has directed transfer of all cases involving sitting / former M.Ps /M.L.As.
This Court deems it appropriate to make a parting observation that 4th and 3rd respondents in first and second Crl.O.Ps will do well to designate one or more Metropolitan Magistrate/s in Chennai for trying criminal cases related to elected M.Ps/M.L.As - Petition dismissed.
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2020 (5) TMI 287
Profiteering - purchase of Flat no. A-802 in Respondent’s project “Azea Botanica” - allegation that benefit of reduction in the rate of GST not passed on - contravention of section 171 of CGST Act - Penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST.
On the issue of net benefit of ITC, it has been revealed from the DGAP’s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 1.33% and during the post-GST period (July-2017 to December-2018), it was 5.17%. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 3.84% (5.17% - 1.33%) of his turnover and the same was required to be passed on to the Applicant No. 1 and the other flat buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as ₹ 2,72,21,5351- which was availed by the Respondent vide Table- C Supra on the basis of the information supplied by the Respondent, which the Respondent has himself accepted that he was in agreement with the DGAP Report dated 24.09.2019 and hence the amount of profiteering computed by the DGAP is hereby accepted as correct - the Respondent, vide his submissions, has himself admitted that he has resorted to profiteering in as much as the ITC benefit that has accrued to him was not passed on to his customes/ flat buyers/ recipients. by way of commensurate reduction in the prices of the flats/ units.
The DGAP has calculated the total profiteered amount as ₹ 2,72,21,5321- for the period from 01.07.2017 to 31.03.2019, out of which, an amount of ₹ 2,04,77,678/- was claimed to be passed on by the Respondent to the home buyers by way of reduction in the demand raised by him on his customers/ flat buyers/ recipients. The DGAP, vide his report dated 02.01.2020, has also reported that the claim of the Respondent that he had passed on the ITC benefit amounting to ₹ 2,04,77,6781- to his customers/ flat buyers by way of reducing the amount from their demand letters, has been duly verified by the DGAP with the data submitted by the Respondent and had been found to be correct as per the calculations made in the table-D & para-22 of the DGAP Report dated 24.09.2019. Table-D of the DGAP Report dated 24.09.2020 reveals that the amount of ITC benefit required to be passed on by the Respondent to the customers/flat buyers was ₹ 2,72,21,532/-, out of which an amount of ₹ 2,04,77,678/- had been claimed to have been passed on to his customers by the Respondent. The same has been verified by the DGAP. Hence, only the balance profiteered amount of ₹ 73,61,290/- is still required to be passed on by the Respondent, which was in the process of being passed on by him to his customers/ flat buyers/ recipients.
There are no reason to differ from the above-detailed computation of profiteering and hence the profiteered amount for the period from 01.07.2017 to 31.03.2019, in the instant case, is determined as ₹ 2,72,21,532/-. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him - out of the total profiteered amount of ₹ 2,72,21,532/- (inclusive of GST), the balance amount of benefit of ₹ 73,61,288/- shall be passed on, forthwith, by the Respondent to the customers/ flat buyers/ recipients, including Applicant No. 1, in accordance with Annexure-12 of the DGAP Report dated 24.09.2019.
Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. ₹ 2,72,21,532/-. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients, including Applicant No. 1, on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017.
Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project ‘Azea Botanica’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section - Accordingly, a notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (5) TMI 286
Profiteering - supply of “American Tourister Sky Tracer HL Blue 68 cm Hard Trolley” - allegation that the Respondent did not reduce the selling price of the above product when the GST rate was reduced and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in its price - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering is determined as ₹ 25,73,82,482/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of ₹ 25,73,82,482/- along with the interest to be calculated © 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited in terms of the Rule 133 (3) (b) of the CGST Rules, 2017.
Since, the recipients in this case are not identifiable, the above Respondent is directed to deposit the amount of profiteering of ₹ 25,73,82,482/- along with interest in the CWFs of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 along with interest @ 18%, till the same is deposited.
Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction of the GST to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (5) TMI 285
Profiteering - Fly Ash Blocks supplied by the Respondent - allegation that the benefit of reduction in the rate of tax not passed on and instead increased the unit base price - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is revealed that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the “Fly Ash Blocks” supplied by the Respondent from 12% to 5% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 which has also not been contested by the Respondent. Therefore, it is evident that rate of tax has been reduced on the above product which was admittedly being supplied by the Respondent. Therefore, the provisions of Section 171 (1) which state that “any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.” squarely apply in this case and the Respondent is bound to pass on the benefit of the above tax reduction to his recipients w.e.f. 01.01.2019.
The Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the profiteered amount is determined as ₹ 55,60,340/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients.
Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction of GST to his recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (5) TMI 284
Classification of goods - carbonated fruit juices - classified as Fruit Juices or aerated drinks? - challenge to AAR decision - AAR has ruled that The products Richyaa Darner Lemon’ and ‘Licta Lemon’ to be supplied by the applicant are classifiable under CTH 22021020 and all others i.e. Richyaa Darner Cola’, ‘Licta Cola’, Richyaa Darner Jeera Soda’, ‘Licta Jeera Masala’, Richyaa Darner Orange’ and ‘Licta Orange’ are classifiable as ‘Other’ under CTH 22021090.
HELD THAT:- The issue of classification of the products similar to that in the case at hand has been dealt with by the committee of Secretaries, Fitment Committee in the GST Regime. Discussions in the GST Council meeting though not controlling, has persuasive value. The observation of the Fitment Committee, which recommended for no change in the prevailing rates under Annexure-III of their recommendations placed for consideration by the GST Council during the 37th Council Meeting - GST Council has agreed to the recommendation holding that From item No. 43 to 57 of Annexure-III, the Council had no objection and approved the recommendation or Fitment Committee. The Hon’ble Minister from Uttar Pradesh raised the issue about item at Si. No. 58 of Annexure III i.e. Extra Neutral Alcohol (ENA).
The above decision of the GST Council also supports the classification ruled by the Lower Authority - there are no reason to interfere with the Order of the Advance Ruling Authority in this matter.
Appeal dismissed.
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2020 (5) TMI 283
Computation of long-term capital gain - benefit of deduction of the compensation paid to M/s Shikhar Travels (India) Pvt. Ltd., from the net sale consideration for computing the long-term capital gain - HELD THAT:- No merit in the argument of the ld. Counsel that the AO cannot sit in the arm chair of a businessman and decide how much compensation should be given for vacating the property and, thereafter, to sell the same to a third party. Since the transaction in the instant case is not doubted, therefore, merely because the parties are related or that the agreement was not registered or notarized, the same, in our opinion, cannot be a ground to deny the benefit of deduction of the compensation paid to M/s Shikhar Travels (India) Pvt. Ltd., from the net sale consideration for computing the long-term capital gain. In this view of the matter, we are of the considered opinion that the ld.CIT(A) was not justified in restricting the compensation paid to M/s Shikhar Travels (India) Pvt. Ltd. to ₹ 38,50,000/- as against the payment of ₹ 1.90 crores for the purpose of computing the long-term capital gain. The grounds raised by the assessee on this issue are accordingly allowed.
Deduction u/s 54 - AO denied the claim of deduction u/s 54 on the ground that the assessee sold a piece of land and not a residential house - existence of any structure/fixtures on land cannot be said to be a residential house however, allowed the benefit of deduction u/s 54F - HELD THAT:- We find although the assessee challenged the action of the AO in denying the benefit u/s 54, the CIT(A) has not adjudicated the same. We find from the various details that the assessee had filed various documents before the CIT(A) to substantiate that there was a residential unit on the farm house. However, he has not given any finding on this issue. We, therefore, deem it proper to restore this issue to the file of the CIT(A) with a direction to adjudicate the issue of deduction u/s 54 which was specifically challenged before him by the assessee. CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. The second issue raised in the grounds of appeal is accordingly allowed for statistical purposes.
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2020 (5) TMI 282
Revision u/s 263 - purchase agreements executed with vendors in relinquishment of their rights in land produced before AO to justify the cost associated with acquisition of land - HELD THAT:- Profit on sale of land can be deduced only after subtraction of corresponding purchase costs. It is not the case of the Revisional Commissioner that purchase cost has been separately claimed. Claim made on behalf of the assessee that relevant facts towards cost associated with the acquisition were placed before the AO in the course of assessment.
It would be reasonable to infer that AO has applied his mind to such aspect. The confusion resulted from improper accounting method whereby the sale receipts have been netted of with purchase costs and net sale consideration was wrongly shown instead of reflecting gross sale consideration and corresponding purchase cost separately, has not ultimately resulted in any under reporting of income. Therefore, no manifest prejudice has resulted to the interest of the Revenue - conditions for exercise of power u/s 263 of the Act are not satisfied in respect of this aspect. We accordingly set aside the action of the Pr.CIT and restore the assessment order to this extent.
Expenditure incurred on payments to sister concerns u/s 40A(2)(b) - consultancy charges and development charges paid to parties - HELD THAT:- We are constraint to observe that AO failed to carry out the duty assigned to him on such vital aspect. Same is the case for payment made towards so called development expenses paid to Chetan Builders. No cogent evidence was shown to have been produced before the AO in justification of such expenses. The nature of services rendered with some degrees of objectivity ought to have been examined by the AO. Inaction on the part of the AO has caused prejudice to the Revenue as contemplated u/s 263 - The plea of the assessee that the payment incurred towards services rendered by sister concern to be revenue neutral is also without any supporting evidence. It is not the tax rate but the tax amount in absolute figures which matters. It was for the assessee to demonstrate that the amount of tax saved on account of such expenses has been corresponding paid by the sister concern.
In the absence of such demonstration, the plea of the assessee towards tax neutrality cannot be appreciated in perspective. No error in the action of the Revisional CIT in setting aside the order of the AO for a direction to re-determine the issue in accordance with law. We thus decline to interfere on the second limb of direction connected to the expenses incurred which are susceptible to provisions of Section 40A(2)(b) - Appeal filed by the assessee is partly allowed.
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2020 (5) TMI 281
Chargeability of interest awarded under Section 28 of the Land Acquisition Act - exemption under Section 10(37) or Income from other sources u/s 56 - AR submitted interest under Section 28 of the Land Acquisition Act, 1984 cannot be considered/equated as interest as referred under Section 56(2)(viii) of IT Act which has been inserted w.e.f. 1.4.2009 effectively from Assessment Year 2010-11 - HELD THAT:- We found the assessee has claimed exemption under Section 10(37) of the Act whereas as per Section 28 of Land Acquisition Act, the compensation to be awarded in excess of the sum awarded by the Land Acquisition Officer, the Court may direct the Land Acquisition Officer to pay interest @ 9% per annum from the date of compensation on land to the date of payment of such excess deposit in the Court. We found the co-ordinate Bench of the Tribunal dealt on the issue in the case of ITO, Ward 1 Vs. Basavaraj M Kudarikannur [2018 (6) TMI 1529 - ITAT BANGALORE] as held interest under section 28 of the Act of 1894 is an accretion to compensation and forms part of the compensation and, therefore, exigible to tax under section 45(5) of the Act. Interest under section 28 of the Act of 1894 is part of the amount of compensation whereas interest under section 34 thereof is only for delay in making payment after the compensation amount is determined. Interest under section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under section 34 - See CIT v. Ghanshyam (HUE) [2009 (7) TMI 12 - SUPREME COURT].
Allowing exemption u/s. 10(37) of the Act on the interest received by the assessee u/s. 28 of the Land Acquisition Act, 1894 - Decided in favour of assessee.
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2020 (5) TMI 280
Disallowance of business promotion expenses - assessee is incurred these expenses for promotion of its business - assessee incurred major expenses which consist of corporate membership of Mumbai Cricket Association, on social functions and donation - HELD THAT:- Hon’ble jurisdictional High Court in Otis Elevator [1991 (4) TMI 53 - BOMBAY HIGH COURT] held that when the assessee incurred expenses for promotion of club fees with a view to enable the assessee to improve its relation and prospects, the payment must be allowed as business expenditure. The other expenses, genuineness of which were not disputed by the lower authorities which mainly consist of either donation to various charitable organizations, distribution of Notebook to poor student and expenses incurred during the festival season for erecting hoarding are also allowable expenses. Considering the nature and expenses, AO is directed to allow all the expenses and delete the disallowance accordingly. In the result, Ground No.A of the appeal is allowed.
Disallowance of interest u/s 40A(2)(a) - HELD THAT:- Neither the AO has brought on record that the interest paid by the assessee is on higher side as compared to the market rate for getting the unsecured loan for such business as undertaken by assessee. Nor the AO has recorded that assessee made the payment to its sister concern for evasion of tax. We have noted that on similar rate of interest, the addition was deleted in assessee’s group case in Puspanjali Realtors [2018 (1) TMI 1588 - ITAT MUMBAI] and on appeal before the ITAT, the order of ld. CIT(A) was confirmed. In view of the above discussion, and respectfully following the order of the coordinate bench in Puspanjali Realtors Pvt. Ltd. In the ground of appeal raised by the assessee is allowed.
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2020 (5) TMI 279
Deemed income u/s 69B - notional interest as income on loan/advances to sister concern - addition has been made on account of notional interest - HELD THAT:- It is not the case of the AO that the loan advanced to the sister concern was not recorded in the books of accounts. It is not also the case of the AO that interest expenditure claimed as deduction by the assessee should have been disallowed under the provision of section 36(1)(iii)
The fact remains that the AO has proceeded to bring to tax notional income without there being any machinery provisions in the Act. Assesee’s case is covered in its favour by the judgment of the Hon’ble Delhi High Court in the case of Shivnandan Buildcon (P.) Ltd. [2015 (5) TMI 192 - DELHI HIGH COURT] had held that notional income on advances could not be brought to tax in absence of any specific provision of the Act. The order of Punjab Stainless Steel Inds Vs CIT. [2010 (5) TMI 53 - HIGH COURT OF DELHI] does not come to the aid of the department because in that case the AO had made disallowance out of interest claimed as deduction u/s 36 (1)(iii) of the Act. Since there is no specific provision in the Income Tax Act for bringing to tax notional interest as income on loan/advances to sister concern, we are unable to agree with the submission of the Ld. CIT (DR) and, therefore, while upholding the findings of the Ld. CIT (A) on the issue, we dismiss this ground.
Reopening of assessment - addition of the share application money received - HELD THAT:- As assessee was asked to show cause as to why addition of the share application money received should not be added to the income of the assessee or permission to get approval to issue notice u/s 148 be moved for assessment year 2011-12. Thus, apparently, the AO himself was aware that the share application money had not been received during the year under consideration but during the preceding assessment year.
We also note that the assessment proceedings for assessment year 2011-12 were subsequently reopened u/s 147 of the Act and order u/s 147 read with section 143 (3) of the Act was passed on 10.4.2019 wherein the impugned sum of ₹ 87 crores has been added to the income of the assessee in assessment year 2011-12.
Since this impugned amount has already been brought to tax in assessment year 2011-12 and since the impugned amount does not relate to this year under appeal, we agree with the findings of the Ld. CIT (A) on this issue and uphold his order of deleting the said amount. The related grounds stand dismissed.
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2020 (5) TMI 278
Deduction u/s 80lB - whether the assessee has set up a new unit or undertaking capable of producing entirely different products or articles from the existing unit and also as to whether the assessee is eligible for claim of deduction u/s 80lB in respect of profits declared in the returns of income filed by it? - HELD THAT:- Appellant has sold entire old machineries during the financial year 2007-08.
The appellant has shown the same as sale of scrap vide his invoice dated 09.01.2009. Then how come, the chartered engineer verified the old machinery on 07.01.2014 when that has already become scrap during the FY 2007-08 and also disposed on 09.01.2009.
CIT(A) held that the certificate given by the chartered engineer cannot be the basis for holding a view that old machines are not capable of manufacturing so called businessman range products and appellant has established entirely new industrial undertaking. Thus, the only external evidence, filed by the assessee has become totally unreliable.
CIT(A) held that the assessee has not maintained separate books of accounts, it employed the same employees for manufacture of all products, there was no physical separation of units, separate power connection and separate stock registers, etc. On such findings, he has come to the conclusion, that no new undertaking has come up by substantial investment, the so called new unit is not an integrated unit by itself, the subsequent purchases of new machinery's after the purchase of old unit was done in the ordinary course of expansion of the business and not in the nature of new industrial undertaking within the meaning of Section 80IB - On such cumulative findings, the assessee has not laid any fresh material to prove that the appellant has established a new undertaking which is capable of manufacturing new products with distinct characteristics has come into existence during the assessment year 2001-02 which is the initial year for the claim of deduction u/s.80IB. We do not find any reason to interfere with the order of the ld.CIT(A) and hence, the corresponding grounds of the assessee are dismissed.
Disallowance of payments made to ASTA Beab Certification Service and China Inspection Company Ltd., as testing / certification fees, invoking provisions of Section 40(a)(i) - HELD THAT:- Since the payment is towards certification, it is purely professional services and in the absence of any business connection and activity being carried out by ASTA and China Inspection Company Ltd., in India, the same is not taxable in India and hence, we find merit in the grounds of the assessee and hence allow the appeals.
AR pleaded that the AO has not given the credit of advance tax and self-assessment tax amounting to ₹ 16,02,767/- and ₹ 1,41,80,738/- respectively for the assessment year 2008-09. The issue was raised before the CIT(A) vide ground No.6, however the ground has not been adjudicated. Therefore the assessee pleaded that AO may be directed to allow correct credit of taxes. We direct the AO to examine and allow the correct credit of taxes.
Incorrect computation of interest U/s.234B which was not adjudicated by the CIT(A) - Therefore the assessee pleaded that AO may be directed to verify and recompute. We direct the AO to verify and recompute accordingly.
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2020 (5) TMI 277
Benami transactions - Provisional Attachment - Whether Single Member Bench can hear the appeals filed under the said Act and pass such orders as deem fit to meet the ends of justice? - HELD THAT:- Direction in the order dated 15-5-2019 was that no further steps shall be taken on the notice issued by the I.O. Liberty was granted to the respondent to initiate the proceedings on the basis of fresh reference, if registered and they may proceed by registering the second reference in accordance with law. In the said order dated 15-5-2019, the respondent had also undertook that if necessary the respondent shall proceed with in accordance with law after serving the notice under section 24 (1) of the said Act.
The second order dated 13-8-2019, a clear order that has been passed with the direction that "no further steps shall be taken by the respondent in view of the impugned order". Here also there is a mention of/reference to impugned order. The relevant portion of the impugned order has already been clarified in the preceding para no.39.
Not in agreement with the learned counsel for the appellants that a Single Member Bench cannot clarify the orders passed by Division Bench in the given facts and circumstances of the appeals. The appellants cannot be allowed to take the advantage of an order which does not meant to be interpreted in the way now the appellants are interpreting. If the interpretation of the orders dated 15-5-2019 & 13-8-2019 are allowed to be interpreted the way the appellants are interpreting then it would amount to stall the investigations and scuttle the power given under the statue to the statutory authority under the said Act.
In view of the discussions and after perusal of the judgments cited by both the parties it is held that the Single Member Bench can clarify the orders passed by the Division Bench under the relevant provisions of the said Act discussed above in the given facts and circumstances of the case and also by following the doctrine of necessity.
It is clarified that no bar has been imposed in the orders dated 15-5-2019 & 13-8-2019 on the respondent to proceed with investigations/calling for documents from the appellants in accordance with law. It is further clarified that for the same, the respondent has to register a fresh reference as per law provided under the said Act and to follow the procedure as directed in the order dated 15-5-2019. Accordingly clarified.
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2020 (5) TMI 276
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application rejected on the ground that it is barred by limitation and no financial debt is in existence - HELD THAT:- If there is a debt and default, normally the Adjudicating Authority is bound to admit the application provided the "corporate debtor" with evidence takes plea that it is not payable in law or in fact.
Time Limitation - HELD THAT:- The matter relating to the Income-tax pending with the office of the Assistant Commissioner of the Income-tax, Chennai, whereby letter dated June 26, 2012, the Assistant Commissioner of Income-tax referred to the balance-sheet of "M/s. Radha Exports (India) P. Ltd." showing therein the name of Smt. Shobha Jayaram (the second appellant) and stated that on verification it found that a sum of ₹ 90,00,000 for loan advanced by Smt. Shobha Jayaram to the proprietary concern "M/s. Radha Exports" transferred as share application money after the incorporation of "M/s. Radha Exports (India) P. Ltd." - the demand notice was issued by the appellants to the "corporate debtor" on December 7, 2017 under the "I&B Code" to which the "corporate debtor" replied on December 14, 2017. The matter was again moved before the Adjudicating Authority which by impugned order dated April 12, 2018 passed in C. P. No. 77/IB/CB/2018 allowed to withdraw the application with liberty to the appellants to file afresh application. It is only thereafter application under section 7 was filed in Form 1 on April 25, 2018.
The claim of the appellants is not barred by limitation as at appropriate stage, the appellants moved application under section 433(e) of the Companies Act, 2013 for winding up of the company. In view of the amendments made, the "I and B Code" was given effect and section 433 having been deleted from the Companies Act, 2013, the appellants had no other option but to move an application under the provisions of the "I and B Code".
Financial creditors or not - HELD THAT:- Admittedly, the amount as shown by the Assistant Commissioner of Income-tax amounting to ₹ 90,00,000 shows that the amount is disbursed by the second appellant-Smt. Shoba Jayaram for consideration of time value of money and it is subsequently converted as share application money of the "corporate debtor". However, no share was issued by the "corporate debtor" in spite of the demand notice - In that view of the matter, the appellants not being the "operational creditors", there was no occasion for them to issue demand notice under section 8(1) and for the said reason, if the Adjudicating Authority allowed them to withdraw the application under section 9 of the "I and B Code" to enable the appellants to file application under section 7, we hold that sub-sequent application was maintainable, as we find that financial debt is payable to the appellants, particularly the second appellant as there is a default and the "corporate debtor" has failed to make out a case that it is barred by limitation and is not payable in law, we hold that this was a fit case for Adjudicating Authority to admit the application under section 7 and initiate "corporate insolvency resolution process" against "M/s. Radha Exports (India) P. Ltd".
The Adjudicating Authority having failed to notice the aforesaid fact while wrongly erred that the appellants are not "financial creditors", we set aside the impugned order dated December 19, 2018 and remit the case to the Adjudicating Authority, Chennai with direction to admit the application after notice to the "corporate debtor" so as to enable the "corporate debtor" to settle the claim prior to the admission of application under section 7 of the "I and B Code" - Appeal allowed.
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2020 (5) TMI 275
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - application dismissed on the ground that there is no debt payable in fact as the account balance shows that "Nil" amount is payable by the "operational creditor" - time limitation - HELD THAT:- The communication made by the "corporate debtor" on August 5, 2013 shows that there is no amount payable to the "operational creditor", which was not disputed by the "operational creditor" - In the present case, before issuance of the demand notice under section 8(1) on December 26, 2017 the "corporate debtor" has disputed the claim and taken plea that it was barred by limitation. Such plea having been taken by the "corporate debtor" prior to December 26, 2017 we hold that there was a pre-existence of dispute.
Appeal dismissed.
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