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Showing 481 to 500 of 1255 Records
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2015 (5) TMI 781
Refund granted by the department - Interest due to part refund - Interest on Interest - Held that:- As admitted by the leaned counsel and also that, similar ground have been raised in A.Y. 1996-97, wherein this issue has been decided against the assessee, following ITAT order for the earlier year in assessee’s own case. Thus, respectfully following the same, we dismiss the grounds raised by the assessee.
Whether refund should have been first adjusted with the interest due on date of grant of refund, instead of being adjusted with the principal refund due? - Held that:- As it is seen in the case of India Trade Promotion Organization Vs. CIT reported in [2013 (9) TMI 451 - DELHI HIGH COURT ] after detail analysis and discussion has held that, when the revenue does not pay full amount of refund, but part of amount is paid, they will be liable to pay interest on the balance outstanding amount, which consist, of tax paid on the interest, which is payable till the payment of the part amount and interest payable on the principal amount, which remained outstanding thereafter. . Accordingly this ground is set aside to the file of the AO with similar direction. Decided partly in fvaour of assessee for statistical purpose.
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2015 (5) TMI 780
Transfer pricing adjustment - wrong selection of comparable - Held that:- Since we have excluded Excel Infoways Ltd from the final list of comparables as having low employees ratio to sales, the average of the comparables of the remaining companies as per TPO being at 20.97% as compared to that of the assessee at 17.11% is within ±5% range as per the provisions of law. The international transactions made by the assessee is directed to be treated as at ALP. As we have decided this issue only by excluding Excel Infoways Ltd from the final list of comparables, we do not find it necessary to decide the other issues in this regard raised by the assessee - Decided in favour of assessee.
Non-grant of exemption u/s 10(35) - Held that:- DRP has given clear direction that a deduction of ₹ 5,98,957/- must be allowed while determining the taxable income of the assessee. We find that the AO has not followed the direction given by the DRP. We direct the AO to follow the direction of the DRP. - Decided in favour of assessee.
Disallowance u/s 14A r.w. Rule 8D - Held that:- A perusal of the assessment order shows that the AO grossly erred by wrongly taking the quantity of units purchased and sold as the value of mutual funds. We find that there is no opening and closing balance. What the AO has taken is the quantity of units purchased and units sold for the purpose of making disallowance u/s 14A of the Act. Since, the disallowance is based on factual errors, we direct the AO to delete the addition of ₹ 19,326/- - Decided in favour of assessee.
Levy of interest u/s 234B and 234C - Held that:- The levy of interest is mandatory though consequential. We accordingly direct the AO to charge interest u/s 243C and 234B of the Act. - Decided against assessee.
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2015 (5) TMI 779
Treatment of receipts from Indian customers as Royalty - payments received on sale and marketing of software license to the customers - DTAA between India and Ireland - Held that:- As decided in the case of Samsung Electronics Co. Ltd. & Others ( 2011 (10) TMI 195 - KARNATAKA HIGH COURT) and its decision therein, that payments to non-resident software supplies for purchase of shrink-wrapped software was in the nature of royalty, was followed by the coordinate bench of this Tribunal in the assessee’s own case for A.Y 2006-07 [2012 (10) TMI 980 - ITAT BANGALORE]. Consequently, the assessee was under obligation to deduct tax at source under section 195 of the Act form the amount paid to foreign software suppliers. - Decided against assessee.
Interest under section 234B - Held that:- No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of s. 191 along with s. 209(1)(d). For this reason, it would not be permissible for the Revenue to charge any interest under s. 234BLevy of interest u/s. 234B of the Act cannot be sustained. Ground raised by the assessee is accordingly allowed. The aforesaid decision of the co-ordinate bench was followed by another co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 - Decided in favour of assessee.
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2015 (5) TMI 778
Unaccounted cash credit - as per assessee the amount reflects advances received from the customers in respect of supply made to them - CIT(A) confirmed addition - Held that:- Assessee could not place any evidence on record to justify the sales after three years from the receipt of advances. No one can give advance against purchases to be effected after three years. If that be the case, there would have been certain correspondence between the assessee and the purchaser. But neither confirmation nor any evidence was filed to prove the genuineness of the claim. In the absence of any confirmation and other relevant evidence, we find no infirmity in the order of the ld. CIT(A) on this issue and we accordingly confirm the same. - Decided against assessee.
Unexplained investments - CIT(A) confirmed addition - Held that:- Since the assessee has not placed any evidence on record to explain the source of these assets, we find no infirmity in the order of the ld. CIT(A). Copy of the surrender statement of Shri Kailash Nath Singh Patel is also available on record, wherefrom it is observed that he has made a surrender item-wise under different heads for different assessment years. Since there is no reference with regard to the investment in the assessee’s proprietary concern, no benefit can be given. Accordingly, we find no merit in the assessee’s contentions. - Decided against assessee.
Unexplained investment in stock of goods - CIT(A) confirmed the addition - Held that:- Similar is the position before us, as no confirmation was filed to establish that the stock was purchased on credit basis. Therefore, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the addition.- Decided against assessee.
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2015 (5) TMI 777
Taxability of Sodexo Meal Vouchers - whether in the nature of goods - consumability within the municipal limit is relevant or not - levy of entry tax / octroi duty / Local body tax (LBT) - Paper based vouchers - affiliates are bound to honour vouchers - On receipt of the vouchers, the Petitioner reimburses the affiliates after deducting service charges - Maharashtra Municipal Corporations Act, 1949 - Held that:- As far as the use or consumption of goods for the purposes of charging Octroi is concerned, the law is laid down by the Apex Court in the case of Hindustan CocaCola Beverage Pvt. Ltd. [2011 (7) TMI 1100 - SUPREME COURT]. Apex court held that though the use of the bottles may not amount to its destruction or total using up, but to attract octroi, the bottles must have finally rested within the Municipal limits and not taken out. This Court concluded that to attract the levy of octroi on the goods brought within the Municipal limits, there must be proof of the fact that the goods got consumed completely within the Municipal limits or were used for an indefinite period in such a way that they come to rest finally and permanently within the Municipal limits or sold within the said limits.
The said vouchers are capable of being sold by the Petitioner after they are brought into the limits of the City. In fact, going by the scheme narrated above, the said vouchers are sold by the Petitioner to its customers for value. The customers give the said vouchers to its employees called as users. On presentation of the said vouchers, the users get foods and beverages from the affiliated establishments and the affiliated establishments on presentation of the said vouchers to the Petitioner get the face value of the said vouchers after deducting the service charges. Thus, the said vouchers are capable of being used or sold within the limits of a City.
The decision of Apex Court in the case of Bharat Sanchar Nigam Limited [2006 (3) TMI 1 - Supreme court] distinguished wherein the issue was considered in respect of of the nature of transaction by which mobile phone calls / electromagnetic waves.
The said vouchers which are printed on paper are the goods within the meaning of the said Municipal Corporations Act. After the vouchers are brought within the limits of the Municipal Corporations Act, the same are capable of being sold. The said vouchers which are capable of being sold, delivered and possessed have its own utility. The same cannot be equated with a lottery ticket which merely an actionable claim. The said vouchers cannot be equated with electromagnetic waves - the said vouchers will fall in the category of printed material which attracts Octroi in terms of the Octroi Rules - Decided against the appellant.
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2015 (5) TMI 776
Denial of refund claim - Unjust enrichment - documents had not been produced to show that the amount charged to the foreign network operator was as per agreement and also to show that no service tax was charged - Held that:- principle of unjust enrichment would not be applicable to export transactions as specifically provided in section 11B of Central Excise Act, 1944. The facts of the case of Vodafone Cellular Ltd. (2014 (3) TMI 117 - CESTAT MUMBAI) are similar to the facts of the present case. However, we further note that the adjudicating authority and the Commissioner (Appeals) have come to the conclusion that the appellant could not satisfy the lower authority that the amount of service tax paid by them is correlated with the invoices raised on foreign mobile operator for inbound international roaming charges. The appellant, on the other hand, claim that the information has been provided and even chartered accountants certificate has been submitted to the effect that the service tax of ₹ 15,64,222/- has been paid in connection with inbound international roaming service and that the service tax was not shown in the invoices nor collected from the customers. Matter remanded back - Decided in favour of assessee.
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2015 (5) TMI 775
Penalty u/s 76 & 78 - short payment of service tax - Held that:- that there is no such allegation on the appellant and the escapement of tax as alleged seems to be short paid due to some mis-calculation. We also find strong force in the contention raised by the representative of appellant that DGCEI which investigated the matter, did not come out with any short payment of service tax prior to April 2004. It was his submission that once in a year, the appellant themselves reconcile the statements and discharge the differential service tax liability short paid therein along with interest. - this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 for setting aside the penalties imposed on the appellant herein. - Decided in favour of assessee.
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2015 (5) TMI 774
Denial of refund claim - Notification No. 5/2006-CE (NT) dated 14/03/2006 - nexus between the exported output service and the input services utilised - Held that:- Nowhere in Rule 5 of the CCR, 2004, is there any condition of establishing a nexus between the input service credit taken and the output service exported. Notification No. 5/2006-ST also does not stipulate any such condition. So long as the credit is admissible and has been taken and lying accumulated and the exporter is unable to utilise the credit, he is eligible for refund of the accumulated credit. This is the whole purpose and aim of Rule 5 of the CCR Rule, 2004. The board's clarification also makes this point very clear. The decisions of this Tribunal in the case of Capiq Enigneering Pvt. Ltd. [2008 (10) TMI 84 - CESTAT, AHMEDABAD] and Amdocs Business Services Pvt. Ltd. [2013 (9) TMI 31 - CESTAT MUMBAI] also support this view - impugned order passed by the lower appellate authority cannot be faulted at all - Decided against Revenue.
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2015 (5) TMI 773
Waiver of pre deposit - Non inclusion of value of spares - Free service during warranty period - Held that:- In the case of free service provided by the applicant on behalf of M/s TKML to the customers of M/s TKML is reimbursing whole of the expenses incurred by the applicant i.e. service charges plus cost of spares during the period of warranty. The applicant is paying service tax on the service part of the transaction and not paying service tax on the value of spares replaced during the period of warranty had been reimbursed by M/s TKML . In this situation also that value of spare replaced during the period of warranty is not includible in the taxable service. Therefore, the applicant has made out a complete waiver of pre-deposit - following the precedent decision in applicant's own case [2015 (5) TMI 670 - CESTAT NEW DELHI] the applicant has made out a case for complete waiver of pre-deposit - Stay granted.
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2015 (5) TMI 772
Condonation of delay - Delay of 29 days - Improper advice of legal counsel - Held that:- for the lapse of the advocate or because of the fact that counsel did not advise them suitably, the appellant should not suffer. Therefore we set aside the decision and condone the delay in filing the appeal and remand the matter to the learned Commissioner (Appeals) for considering the appeal afresh in accordance with law. Needless to say principles of natural justice will be observed while considering the matter afresh. - Delay condoned.
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2015 (5) TMI 771
Waiver of pre deposit - Denial of CENVAT Credit - GTA Service - claim of the appellants is that the CENVAT Credit is taken in respect of cement wherein the appellants bore the freight and supplied the goods at the premises of customers on FOR destination basis - Held that:- Decision of the Hon ble Supreme Court [2002 (10) TMI 96 - SUPREME COURT OF INDIA] may not be applicable to the facts of this case since in that case, factory gate was admittedly the place of removal and there was no dispute about the place of removal. In the case of Madras Cements Ltd., the decision was rendered prior to the period 01/04/2008 and further it was held that prior to 01/04/2008 only credit was admissible. We are considering the period subsequent to 01/04/2008. However, in cases like this, it has to be taken note that the decisions have to be rendered on the basis of fact. On going through the invoices, we find that as claimed by the learned counsel, freight has been paid by them and further the sale is on MRP basis and duty has been arrived on the basis of MRP - appellant has made out a prima facie case in their favour. Accordingly, the requirement of predeposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (5) TMI 770
Denial of SSI exemption - Notification No. 1/93-CE dated 28.02.1993 - appellants had not opted the benefit of exemption in respect of the goods under the sub-heading 7325.10 and paid full duty - Held that:- The appellant contended that they were not aware that the goods under heading No. 7325.10 was within the purview of the exemption Notification No. 1/93-CE w.e.f. 01.03.94. We find that there is no dispute that after amendment of the SSI exemption Notification No. 1/93 as amended by Notification No. 59/94, the simultaneous availment of modvat and SSI exemption by the manufacturer on different goods is not permissible. - Following decisions of CCE, Raipur Vs. National Cement Corporation [2013 (3) TMI 524 - CHHATTISGARH HIGH COURT], CCE, Ahmedabad Vs. Ramesh Food Products [2004 (11) TMI 103 - SUPREME COURT OF INDIA] and Kamani Foods Vs. Collector of CE, Patna [1994 (1) TMI 109 - CEGAT, NEW DELHI] - there is no merit in the appeal filed by the appellants. Accordingly, No reason to interfere with the impugned order - Decided against assessee.
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2015 (5) TMI 769
Waiver of pre deposit - Classification of goods - Held that:- Prima facie, it appears that the contents of the goods do not substantially contain nitrogen and phosphates. To call the goods as fertilizers, these ingredients substantially dominate. Therefore, appellant is directed to deposit ₹ 10,00,000 - Partial stay granted.
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2015 (5) TMI 768
Denial of refund claim - Finalization of provisional assessment - Whether the doctrine of unjust enrichment inserted by way of Sub-section (5) of Section 18 of the Act with effect from 13.7.2006 was applicable to refund under Section 18 prior to the amendment in view of Section 27(2) of the Act - Held that:- Sub-section (2) of Section 27 of the Act provides that any excess duty so paid after such determination shall be credited to the Fund. The proviso may be in exception instead of crediting to the Fund, the said amount is payable to the assessee, if the said amount does not fall within any of the categories mentioned in (a) to (f) of the said proviso. One such instance where the assessee was not entitled to refund was where he had already passed on the burden of duty on the customer. That is, if it is refunded to him, it would be a case of unjust enrichment. Such a provision was conspicuously missing in Section 18 of the Act. It is by way of amendment which came into effect from 13-7-2006 the said provisions contained Sub-section (2) of Section 27 of the Act was added to Section 18 by way of Sub-section (5). If for a claim under Section 18 of the Act, if an assessee has to put forth a claim under Section 27 of the Act, there was no necessity for the parliament to introduce Sub-section (2) of Section 27 of the Act by way of Sub-Section (5) of Section 18 of the Act. It only demonstrates Sections 18 and 27 are merely exclusive.
To claim refund under Section 18 of the Act, the assessee was not expected to invoke Section 27 of the Act. Refund under Section 18 of the Act is independent of refund under Section 27 of the Act. It is for this reason when the Parliament wanted to prevent unjust enrichment, they amended Section 18 of the Act and introduced by way of Sub-section (5) what is contained in Sub-section (2) of Section 27 which includes unjust enrichment. Therefore, it follows prior to the amendment, this doctrine of unjust enrichment was not attracted to refund claim under Section 18 of the Act. - Decided in favour of assessee.
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2015 (5) TMI 767
Detention of appellant's husband - Habeus corpus - Prevention from abatement of smuggling - Delay in communicating order to appellant - Held that:- The manner in which the representation of the detenue was dealt with does not in our view comply with the constitutional mandate and falls foul of the obligation to decide the representation “ as soon as may be” in Article 22(5) of the Constitution. In our view the representation could have been decided much earlier. The duration of time that has lapsed between the receipt of representation and consideration by the Authority and communication of the order of detention. As stated above the delay is of 23 days and 19 days respectively. We have noticed that in many cases, holidays are cited as reason for delay. This has become routine. What has been lost sight of is the fact that the detenu continues to be incarcerated without trial even on holidays. The mere fact that four holidays intervened still does not justify the delay in considering and communicating the decision on the representation. - If indeed the mandate of Supreme Court is to be honestly carried out by the Authority, the Authority should endeavor to prepare themselves to deal with such representation more expeditiously in the interest of upholding the law.
The file is said to have been received from Nagpur in Mumbai on 23.12.2014 after which the rejection intimation was sent to Nashik Road central prison. If that be so, we wonder how in the affidavit on behalf of DRI it is stated that it received a communication from the office of Detaining Authority to the effect that the representation made by the detenu was rejected by the Detaining Authority on 19.12.2014. Surely, there is more than meets the eye. Since admittedly, the Additional Chief Secretary had rejected the representation on 20.12.2014 there is no explanation on how communication of the said decision could have been received by the DRI on 19.12.2014. We are, therefore, convinced beyond all reasonable doubt that the delay is not properly explained and continued detention of the detenu is in violation of the constitutional mandate of Article 22(5) of the Constitution of India and order of detention stands vitiated - Decided in favour of appellant.
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2015 (5) TMI 766
Seizure of Chinese silk - no legal authorization of purchase could be traced - Held that:- Whether the appellant was aware of the fact that he was involved in contraband goods, or was an innocent agent of the real culprit is therefore, a matter of fact, appreciation of which has been undertaken by two adjudicating authorities. Besides, the Court notes that the conclusions here were based not only on the retracted confessional statement but also based on the seizure -which was witnessed by the appellant’s father, who recorded a statement (and who was cross-examined during the adjudication proceedings). Moreover, there was no material adduced by the appellant to substantiate the legitimate source of these seized goods; had they been purchased through acceptable channels, some support in the form of invoices, receipts etc. would have invariably found their way into the record. The complete absence of such material or documents negates the appellant’s arguments. - Decision in the case of M.P. Goenka [2015 (2) TMI 263 - DELHI HIGH COURT] distinguished - Decided against assessee.
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2015 (5) TMI 765
Application under Section 560(6) of the Companies Act, 1956 for restoration of name - Name stuck off due to non-filing of Annual Returns - Initiation of proceedings under Section 560 of the Companies Act, 1956 - Primary responsibility for ensuring that proper returns and other statutory documents are filed, in terms of the statute and the rules, remains that of the management - Held that:- It has been averred on behalf of the respondent that though the notices/letters under S.560(1) and (3) were sent, their copies and dispatch proof are not traceable. It is pertinent to note here that since per the petitioner’s enquiries and inspection of its official record the updated address of the registered office of the petitioner-company was not reflected in the records of the respondent; and further, in absence of any submission and/or documents to the contrary, it is entirely possible that the respondent had sent notices under S.560 to the petitioner on the old address of its registered office and the same may not have been received by the petitioner.
Under the facts and circumstances, it is possible that notice in respect of action under S.560 of the Companies Act, 1956, was not sent to the registered office of the company. Consequently, the condition precedent for the initiation of proceedings to strike off the name of petitioner from the Register maintained by the respondent, was not satisfied. And looking to the fact that the petitioner is stated to be a running company; and that it has filed this petition within the stipulated limitation period; and also to the decision of the Bombay High Court in Purushottamdass and Anr. (Bulakidas Mohta Co. P. Ltd.) [1984 (4) TMI 247 - HIGH COURT OF BOMBAY ] , it is only proper that the impugned order of the respondent dated 23.06.2007, which struck off the name of the petitioner from the Register of Companies, be set aside. At the same time, however, there is no gainsaying the fact that a greater degree of care was certainly required from the petitioner company in ensuring statutory compliances.
Accordingly, the petition is allowed. The restoration of the company’s name to the Register maintained by the Registrar of Companies will be subject to payment of costs of ₹ 22,000/- to be paid to the common pool fund of the Official Liquidator, within three weeks; and on completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late deposit of statutory documents. The name of the petitioner company, its directors and members shall, as a consequence, stand restored to the Register of the respondent, as if the name of the company had not been struck off, in accordance with S.560(6) of the Companies Act, 1956. - Application for restoration of company name approved.
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2015 (5) TMI 764
Application for Scheme of Amalgamation under sections 391(2) & 394 of the Companies Act, 1956 - Regional Director's observation regarding all FEMA compliances , Non filing of e-form 32 (DIR 12) regarding regularization of their Additional Director duly addressed - Held that:- Although no objection has been raised by the Regional Director, but in Para 4 of his report, he has submitted that on perusal of the shareholding pattern of both the companies, it has been observed that all the shares are held by foreign companies. He, therefore, prayed that the petitioner company may be asked to give an undertaking for all compliances from Reserve Bank of India as required under FEMA for above transactions involving foreign banks/entities. Further, in para 5 of the report, he has pointed out that the petitioner has not filed the requisite e-form 32 (DIR 12) regarding regularization of their Additional Director, namely Sh. Raman Nagpal. In reply to the aforesaid, the petitioner has undertaken to comply with the statutory provisions under the FEMA and the RBI Act, and the rules and regulations framed thereunder. The same is accepted and the petitioner shall remain bound by the same. The Assistant Registrar of Companies has submitted that the petitioner has also filed the relevant e-form 32 (DIR 12) with regard to the Director, Sh. Raman Nagpal for regularization of his directorship. In view of the aforesaid, the observations raised by the Regional Director, Northern Region stand satisfied.
Considering the approval accorded by the equity shareholders and creditors of the petitioner companies to the proposed Scheme of Amalgamation and the affidavits filed by the Regional Director, Northern Region not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, subject to sanction of the Scheme of Amalgamation in respect of the transferor company from the court of competent jurisdiction, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. - Application for Scheme of Amalgamation approved.
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2015 (5) TMI 763
Default in repayment of dues - Account classified as NPA - Notice for possession of property under Section 13(4) of the Act read with Rule 8 and 9 of the Security Interest (Enforcement) Rules, 2002 - Writ jurisdiction in case of Alternate remedy - Three clear-cut circumstances wherein a writ petition would be maintainable even in a contractual matter. Firstly, if the action of the respondent is illegal and without jurisdiction, secondly, if the principles of natural justice have been violated, and thirdly, if the appellants' fundamental rights have been violated - Amount classified as NPA in contravention of RBI guidelines - Bank should not classify the account as NPA only at the instance of such deficiency which was temporary in nature - The RBI guidelines provides ninety days time to the petitioners to clear the deficiency, that is, till 31.03.2015 and the same was cleared by the petitioners in January, 2015 itself - The action of the respondent-Bank in rejecting the petitioners' objection was per se arbitrary and illegal.
Held that:- In the light of the rival stand submitted by the parties, we first take up the plea of alternative remedy. The respondent-Bank has relied upon a decision of the Supreme Court in United Bank of India Vs. Satyawati Tondon and others [2010 (7) TMI 829 - SUPREME COURT ]. No doubt the petitioners has a remedy of filing an application under Section 17(1) of the Act. However, the jurisdiction of the High Court under Article 226 of the Constitution of India is not ousted merely because an appeal is provided under Section 17 of the Act. The power under Article 226 of the Constitution is wide and for the exercise of such power there is no restriction except the territorial restriction. However, the exercise of the writ jurisdiction is discretionary. Ordinarily, the Court does not entertain the matter where the petitioners have an alternative remedy.
In Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and others, [1998 (10) TMI 510 - SUPREME COURT] wherein this Court has held that there are three clear-cut circumstances wherein a writ petition would be maintainable even in a contractual matter. Firstly, if the action of the respondent is illegal and without jurisdiction, secondly, if the principles of natural justice have been violated, and thirdly, if the appellants' fundamental rights have been violated." The Supreme Court in Harbanslal Sahnia and another Vs. Indian Oil Corpn. And others [2002 (12) TMI 564 - SUPREME COURT], held that the petitioners' dealership, which is their bread and butter, cannot be terminated for irrelevant and non-existent cause. The Supreme Court held that the petitioners should not be relegated to the rule of alternative remedy and that the High Court should have entertained the writ petition and granted relief instead of driving the petitioners to initiate the arbitration proceedings.
In the light of the aforesaid decisions, we are of the opinion that at present moment only a notice under Section 13(4) of the Act has been initiated. No action on it had been taken by the respondents and, therefore, at this stage the petitioners cannot avail the remedy of an appeal under Section 17 of the Act. It is only when an action is taken under Section 13(4) of the Act the cause of action arises for the petitioners to file an appeal under Section 17 of the Act. In any case, we are of the opinion that considering the facts and circumstances that has been brought on record, we find that the action of the respondents in declaring the petitioners' account as a NPA was arbitrary and in violation of RBI guidelines. We also find that there are no disputed questions of fact, which needs to be adjudicated and the entire matter can be decided on the basis of the guidelines framed by the RBI.
It is clear that a notice can only be issued if a borrower commits default in the repayment of the security debt and his account in respect of such debt, is classified as NPA. Unless and until the account is declared as NPA, no notice under Section 13(2) of the Act could be issued, even if there is a default. Sub-section (3A) of Section 13 of the Act gives an opportunity for the borrower to make any representation or raise any objection to the said notice, which in turn is required to be considered and decided by the secured creditor. Sub-section (4) of Section 13 of the Act provides the secured creditor to adopt any of the measures for recovery of the secured debt.
From the RBI guidelines, it is clear that a substandard asset is one, which has remained NPA for a period less than or equal to 12 months. The guidelines provides that such asset will have well defined credit weakness that jeopardies the liquidation of the debt and are characterised by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected, meaning thereby that if the borrower corrects the deficiency then the substandard asset would be upgraded to a standard account as per para 4.2.5 of the RBI guidelines, which provides that if arrears of interest and principal is paid by the borrower, the account would no longer be treated as non-performing and would be classified as a standard account. In this regard, the Court further finds from a reading of para 4.2.4 of the guidelines that the classification of an account as NPA must be done by Bank based on the record of recovery and that the Bank could not classify an account as NPA merely due to the existence of some deficiencies which are temporary in nature such as balance outstanding exceeding the limit temporarily.
In the light of the aforesaid, we are of the view that the initial action taken by the Bank classifying the petitioners' account as NPA was wholly invalid, illegal and against the guidelines issued by the RBI, which has the force of law and which is binding upon the Bank. We further find that the temporary deficiency in the petitioners' cash credit account was cured and the petitioners had brought its account within the cash credit limit in January, 2015. The RBI guidelines provides ninety days time to the petitioners to clear the deficiency, that is, till 31.03.2015 and the same was cleared by the petitioners in January, 2015 itself. The respondent-Bank should have upgraded the petitioners' account again as a standard account, which was not done and consequently the rejection of the petitioners' reply by the respondent-Bank and issuance of notice under Section 13(4) of the Act becomes patently illegal and arbitrary.
At this stage, we must observe that the finance is required so that the petitioners could run their business. If the loan or the cash credit limit is withdrawn abruptly it becomes difficult for the borrower to repay the amount since the amount sanctioned by the Bank is invested in the business. We find that the business of the petitioners is running and, it is not a case where the business has stopped running or where the business is running in a loss. No doubt the respondent-Bank is required to protect the loan which it had sanctioned but, at the same time, the respondent-Bank should adopt a practical and pragmatic approach for which the RBI has framed guidelines which are binding upon them and which are required to be followed meticulously. In the instant case, we find the respondent-Bank has failed to adhere to the terms indicated in the guidelines. Consequently, the action of the respondent-Bank in declaring the petitioners' account as NPA by its order dated 31.12.2014 as well as the notice dated 01.01.2015 issued under Section 13(2) of the Act and the notice dated 17.03.2015 issued under Section 13(4) of the Act are quashed. - Decided in favour of appellant.
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2015 (5) TMI 762
Addition on account of profit on sale of plot of land - CIT(A) deleted the addition - Held that:- It is not in dispute that the assessee had given a plot of land to M/s.Tirupati Corporation for development. As the entire payment for this transfer was not received by the assessee, the assessee had a lien over the said plot of land and in government records, the name of the assessee continued as registered owner over the said plot of land. M/s.Tirupati Corporation constructed complex which was the property of M/s.Tirupati Corporation. The FSI over the said construction also belonged to M/s.Tirupati Corporation. The said M/s.Tirupati Corporation vide two sale deeds in question sold the FSI for ₹ 46,08,000/- and ₹ 72,00,000/-. Name of the assessee appeared on those sale deeds as a vendor along with the name of M/s.Tirupati Corporation as confirming party, because, the title over the said land was not yet recorded in the government records in the name of M/s.Tirupati Corporation. The entire consideration of ₹ 46,08,000/- and ₹ 72,00,000/- was received by M/s.Tirupati Corporation, and they have duly shown the same as their income in their return of income. No material has been brought on record by the Revenue to show that any part of the said consideration of ₹ 46,08,000/- and ₹ 72,00,000/- was actually received by the assessee or the assessee was the owner of the complex, in respect of which FSI was sold. The sale consideration of ₹ 45,64,000/- which was shown by the assessee in its return of income was in respect of sale of land and had nothing to do with the sale of FSI of ₹ 46,08,000/- and ₹ 72,00,000/-. Thus, the AO clearly erred in adjusting the sale consideration of ₹ 45,64,000/- with the sale consideration of ₹ 46,08,000/- and ₹ 72,00,000/-. Thus no error in the findings of the CIT(A), which is confirmed. - Decided against revenue.
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