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2020 (5) TMI 674
Disallowance of Interest on Working Capital - CIT (A) Restricted the disallowance on account of interest to 50% - HELD THAT:- As brought to our notice that the similar issue stands covered against the revenue in the earlier year in [2018 (2) TMI 2027 - ITAT DELHI] for the assessment year 2009-10. Hence, the appeal of the revenue is hereby dismissed.
Matter referred to the file Assessing Officer for verification of the utilization of the loan for business purpose by taking into account the amount of the loan raised - The quantum of the own capital and the reserves & surplus, utilization of the amount for day-to-day running of the business and utilization of the amount for investment in the equity shares of the subsidiary company or the amount invested for infusion of the capital in any other company. The AO may then take a considered decision with regard to disallowance of interest on loan and bank charges in accordance with the provisions of the Income Tax Act.
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2020 (5) TMI 673
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The respondent-company is unable to pay the outstanding operational debt which is due and payable arising in the usual and ordinary course of business and has become commercially insolvent. In such circumstances, it is just and equitable and in the interest of the justice that the corporate insolvency resolution process be initiated against the respondent-company - the corporate debtor has defaulted in making payment and the date of default is August 23, 2016 to September 27, 2016.
The petition is filed on August 30, 2018 under section 9 of the Insolvency and Bankruptcy Code, 2016 for the unpaid operational debt due and defaulted of ₹ 12,11,305. Invoices are of June 23, 2016, July 6, 2016, July 8, 2016, July 18, 2016 and July 27, 2016. Date of default starts from August 23, 2016 to September 23, 2016 - No pre-existing dispute before the filing of this application is observed.
This Adjudicating Authority is satisfied that:
(a) Existence of debt is above ₹ 1 lakh.
(b) Debt is due and defaulted.
(c) Default has started from on August 23, 2016 to August 27, 2016.
(d) The petition has been filed within the limitation period as the date of default is August 23, 2016 and the petition has been filed on September 30, 2018, i. e., within three years of the default.
(e) Copy of the application filed before the Tribunal has been sent to the corporate debtor, and the application filed by the petitioner under section 9 of the IBC is found to be complete for the purpose of initiation of corporate insolvency resolution process against the corporate debtor.
Petition admitted - moratorium declared.
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2020 (5) TMI 672
Maintainability of application - initiation of CIRP - Corporate Debtor failed to repayment of its dues - existence of debt and dispute or not - HELD THAT:- The restructuring plan which, as already indicated, cannot be reckoned as a resolution plan seeks to afford a backdoor access to the former managing director of the corporate debtor. Such an action is prohibited under law. The restructuring plan masqueraded as a resolution plan by Mr. Madhusudhan accordingly cannot be accepted, notwithstanding its approval by the CoC. Such approval cannot be said to be in conformity with section 30(2) of the Code. Restructuring plan in the garb of a resolution plan having failed to garner acceptance of this Authority, further prayer in I. A. No. 68 of 2020 by the resolution applicant to grant him sufficient time to make necessary modification to the said resolution plan cannot therefore, be acceded to.
The prerogative of the CoC in not considering the resolution plan submitted by M/s. Orion Ferro Alloys P. Ltd., and Mr. Madhusudhan Raju Chintalapati cannot be evaluated by the Authority. The commercial wisdom of the CoC in accepting a resolution plan needs to be respected by the Adjudicating Authority - Having said that it would not be out of place mention here that the Adjudicating Authority can evaluate a resolution plan if it conformed to terms of section 30(2) of the Code. As already indicated the resolution plan approved by the CoC does not meet the requirements of section 30(2) of the Code. The same therefore, could not be accepted. Its non-acceptance however would not automatically render the plan submitted by M/s. Orion Ferro Alloys P. Ltd., acceptable.
Application dismissed.
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2020 (5) TMI 671
Arbitration proceedings - section 29A of the Arbitration and Conciliation Act, 1996 - Dishonor of Cheque - extension of time period of limitation - HELD THAT:- In view of this Court’s earlier order dated 23.03.2020 passed in Suo Motu Writ Petition (Civil) No.3/2020 and taking into consideration the effect of the Corona Virus (COVID 19) and resultant difficulties being faced by the lawyers and litigants and with a view to obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunal across the country including this Court, it is hereby ordered that all periods of limitation prescribed under the Arbitration and Conciliation Act, 1996 and under section 138 of the Negotiable Instruments Act 1881 shall be extended with effect from 15.03.2020 till further orders to be passed by this Court in the present proceedings.
In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown.
Application disposed off.
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2020 (5) TMI 670
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - intention to recover alleged outstanding amount or to initiate the corporate insolvency resolution process (CIRP) against the corporate debtor or not - pre-existing dispute or not - time limitation - HELD THAT:- The respondent has entered into a turn-key project with IPCHL now known as Hiranmaye Energy Ltd., for a coal handling plant and this contract was entered with IPCHL associate company-Shristi Infrastructure Development Corp Ltd. Though the purchase orders in question, were placed by the respondent on the petitioner for supply of goods in question, those are meant and delivered to ultimate customer namely, IPCHL. Therefore, ultimately, all three parties to the issue viz : the petitioner, respondent and IPCHL, conducted three meetings on July 8, 2015, August 12, 2015 and November 24, 2015, whereby the petitioner agreed that IPCHL would release the balance amounts to it. Accordingly, a minutes of meeting (MoM) dated November 24, 2015, was duly executed by all three parties, wherein IPCHL has agreed to release outstanding payment subject to despatch of the materials mentioned therein. IPCHL has also entered into similar agreements with other vendors as well and has been making direct payments.
It is also relevant to point out here that the petitioner got issued a legal notice as early as March 14, 2017, through their counsel M/s. Rajendra Lal Dua and Co. to the respondent. In response to the said legal notice, the respondent, got issued a reply dated April 6, 2017 through their counsel by inter alia, stating that the petitioner has agreed to receive the payments directly from IPCHL ; they have also paid ₹ 3,45,51,500 out of ₹ 4,71,83,890.61 ; and they have already authorised the petitioner to collect defaulted amount (last) ₹ 46,68,364 from IPCHL. Therefore, they have made it clear that there was no existing liability between them, after amendment of contract as agreed by it, and thus requested them to return the security cheques (PDC) given by them - Moreover, when the respondent has replied the petitioner as early as April 6, 2017, as stated supra, stating they are not liable to pay any amount to them, the petitioner have failed to initiate any action except a criminal petition stated to have been filed under section 138 of the NI Act, till they have issued the statutory demand notice dated June 27, 2019, under the provisions of the Code. Even as per the purchase orders/MoM in question, there is no mention about element of interest for defaulted amount. Contrary, interest is also claimed for ₹ 32,35,375 along with principal amount of default. The petitioner has not furnished any reasons for not taking appropriate legal action in pursuance to their earlier legal notice dated March 14, 2017.
It is not the case of the petitioner that the respondent has received goods in question or received payments directly from IPCHL and used it. The contention of the petitioner that the MoM in question would not bind them is not at all tenable and it is liable to be rejected. And all the parties to MoM are bound by terms and conditions of it - So far as the issue of post- dated cheques by the respondent and their dishonour is concerned, it is for the parties to prosecute the criminal case, which is stated to be pending before the competent court, subject to merits of that case.
The petitioner failed to make out even prima facie case about the defaulted amount to be payable by the respondent, apart from it, the petition is barred by laches and limitation - Petition dismissed.
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2020 (5) TMI 669
TP Adjustment - Guarantee Fees - rate of the guarantee commissions - no dispute about the various types of corporate guarantee(s) extended by assessee to various banks on behalf of its AEs - HELD THAT:- DRP granted relief in restricting the guarantee commissions with regard to stand by letter of credit (SBLC), by directing the AO/TPO to consider 0.5% in additions of reimbursement of 1.25% and 1.40% which is already received by the assessee. Rest of the adjustments suggested by the TPO is affirmed by ld. DRP. As assessee has not made any specific submission against affirming the commission @ 0.5% with regards to SBLC, which we affirmed.
We find merit in the alternative submissions of the assessee that Hon’ble Bombay High Court in CIT Vs Everest Kanto Cylinders Ltd [2015 (5) TMI 395 - BOMBAY HIGH COURT] held that 0.5% of guarantee commissions is at arm’s length price. Thus, we accept the alternative submission of the ld. AR for the assessee and direct the AO/TPO to recompute the adjustment on account of other guarantee commissions @ 0.5% in additions to the commissions already charged by the assessee. We also accept the submission of learned AR of the assessee that guarantee commission on the operating lease must be computed on the basis of lease rental outstanding only, and not on the aggregate of all future lease rentals. Needless to direct that before fresh computation the TPO /AO shall grant a fair and proper hearing to the assessee. The assessee is also directed to provide the necessary details to the TPO/AO. In the result ground No. 1 of the appeal is partly allowed.
Disallowance under section 14A read with Rule (rwr) 8D - assessee has made huge investment in equity/preference shares - HELD THAT:- AO nowhere identified/recorded that assessee earned any exempt income during the relevant financial year. Further, we have noted that the dividend income earned by the assessee from foreign subsidiaries has been offered to tax. It is now settled law that in absence of any exempt income no disallowance under section 14A is attracted. See assessee own case [2018 (1) TMI 398 - ITAT MUMBAI], [2018 (12) TMI 1132 - ITAT MUMBAI] and [2017 (9) TMI 726 - ITAT MUMBAI] - Decided in favour of assessee.
Disallowance of interest under section 36 (1)(iii) - DRP while confirming the interest disallowance under section 14A [Rule 8D (2)(ii)] held that in any case the interest computed by AO is disallowable under section 36(1)(iii) - HELD THAT:- As the reserve and surplus funds with the assessee are in far excess than the investment made for subsidiaries. Therefore, respectfully following judgment of Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] it would have to be presumed that the investment made by the assessee would be out of the interest-free funds available with the assessee. Hence, we direct the AO even to delete the disallowance under section 36(1)(iii). In the result this grounds of appeal is allowed.
Addition on account of CENVAT credit in valuation of closing stock - HELD THAT:- As relying own case [2017 (9) TMI 726 - ITAT MUMBAI] addition is to be deleted.
Disallowance of interest under section 36(1)(iii) - HELD THAT:- As decided in own case [2018 (1) TMI 398 - ITAT MUMBAI] the assesse’s has incurred expenses on behalf of certain foreign subsidiaries and Indian subsidiary and shown them under the head Advances Recoverable. The assessee has not made any non business advance to the these companies, but these amount represents various debits in the nature of sale of spares, royalty receivable, service charges and the expenses incurred on their behalf such as traveling expenses, establishment expenses, financial guarantees, communications expenses, etc. The assessee does not have system of charging interest on such debits of expenses incurred on their behalf. Such advances did not attract any adjustment in Transfer Pricing order also. However, the Ld. AO considered these debit balances as advances without interest and disallowed out of interest u/s 36(1)(iii). We do not find any merit for the disallowance so made by the AO
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2020 (5) TMI 668
The High Court of Punjab and Haryana dismissed the petition as withdrawn with liberty for the petitioner to seek appropriate remedies regarding the provisional release of goods. The petitioner's contentions are left open to be raised later, and the order for provisional release should be issued within 10 days.
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2020 (5) TMI 667
Allowable expenditure u/s 37(1) - contribution paid to The Deputy Commissioner, Bellary for Hampi Utsay - Hampi utsav is a cultural festival to boost the morale and cultural difference for national and international - HELD THAT:- In the present case, the payment is not only made by the assessee firm but similar payments have also been made by all the business / industrial houses situated in Bellary and nearby districts depending upon the scale of business. It is also noted by CIT(A) that the present payment has helped the firm in getting goodwill of local citizens, bureaucrats, politicians, press and others.
When this is admitted by learned CIT(A) that this payment in question will help the firm in getting goodwill of local citizens, bureaucrats, politicians, press and others, this will definitely benefit the assessee firm’s business also, may at a later date. Therefore, in our considered opinion, this expenditure is an allowable expenditure under section 37(1) - Decided in favour of assessee.
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2020 (5) TMI 666
Removal of provisional attachment - attachment of assets of the corporate debtor, specifically the land, buildings, capital works in progress, plant, machinery, furniture, etc. - overriding effect of IBC over PMLA - contention of the learned counsel is that the effect of the Provisional Attachment Order is to create an encumbrance on the assets of the Corporate Debtor. The moratorium prohibits creation of any encumbrance over the assets of the Corporate Debtor - whether respondent no. 1 can issue Provisional Attachment Order against the assets of the Corporate Debtor during the currency of moratorium order passed under section 14 of the I&B Code? - section 5(1) of PMLA, 2002 - HELD THAT:- The admitted fact is that CIRP has commenced against the Corporate Debtor -company, viz. LMIPHL. The Provisional Attachment Order was issued on 30.12.2019 by attaching the assets of the Corporate Debtor under the relevant provisions of the PML Act. The attachment is challenged on the ground that the proceedings under the PML Act are of civil nature. Therefore, the proceedings are hit by moratorium order passed under section 14 of the I&B Code. The attachment will have effect on creating encumbrance over the assets of the Corporate Debtor which is prohibited by virtue of moratorium order. The Provisional Attachment Order is also challenged on the ground that the provisions of the I&B Code have overriding effect by virtue of section 238 of the I&B Code. So, any order passed under section 14 of the I&B Code will prevail against any order passed under the PML Act as regards the assets of the Corporate Debtor.
The contention of the learned counsel is that the provisions of the I&B Code will have overriding effect over other laws. By virtue of section 238 of the I&B Code, when an order under section 14 of the I&B Code is passed, then attachment cannot be effected under the PML Act - As against this it is the contention of the learned counsel for the ED that the proceedings under the PML Act are different than the proceedings under the I&B Code. Proceedings are initiated under the PML Act in connection with involvement of proceeds of crime. Therefore, moratorium has no application.
The applicant cannot take shelter under section 32A(2) of the I&B Code, because when Provisional Attachment Order was passed there was no resolution plan approved by the COC, which was confirmed by the Adjudicating Authority under section 31 of the I&B Code - In the present case, no Resolution Plan is approved by the COC as on the date of the Provisional Attachment Order. Therefore, section 32A(2) of the I&B Code will not apply to the Provisional Attachment Order passed by respondent no. 1.
Application dismissed.
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2020 (5) TMI 665
Disallowance of salary paid overseas to expatriates of the Appellant working in India by the Head Office and the Indian taxes paid thereon by the Head Office - HELD THAT:- This issue decided in favour of assessee [2016 (4) TMI 817 - DELHI HIGH COURT].
Interest paid to Head Office and overseas branches and interest received from Indian branches need to be deleted as relied by own case [2016 (4) TMI 817 - DELHI HIGH COURT].
Interest received by the Indian branches from its own Head Office/ overseas branches - chargeable to tax in the hands of the assessee or not? - HELD THAT:- The issue stands covered in favour of the assessee by the decision of the Hon’ble Bombay High Court in the case of DIT vs M/s. Credit Agricole Indoseuz [2015 (6) TMI 974 - BOMBAY HIGH COURT]
MAT applicability - assessee is a banking company which draws up its account as per the Banking Regulation Act and not as per Part II & III of the Schedule VI of the Companies Act - HELD THAT:- Provision of section 115JB of the Act are not applicable to the assessee company.
Taxability of interest received on ECB, given to Indian Borrowers - HELD THAT:- Interest on ECBs was not attributable to the Indian branches of the assessee and only the portion was taxable in the hands of the Indian branches for the role played in arranging the ECBs. We find that the issue raised in the present appeal is fully covered in favour of the assessee and where the assessee had already offered to tax, the portion attributable to it, then there is no merit in making any other additions in the hands of the assessee. The Tribunal in own case[2019 (9) TMI 731 - ITAT DELHI] had also allowed the claim in the hands of assessee. Ground of appealby the assessee is thus allowed.
Treatment in respect of Deferred Bank Guarantee Commission - HELD THAT:- There is no merit in the orders of the authorities below in treating the commission received on Bank Guarantee as taxable on receipt basis. We find that the said issue stands covered in favour of the assessee by the order of the Hon’ble High Court in assessee’s own case in Assessment Year 2007-08 and 2008-09 [2016 (4) TMI 817 - DELHI HIGH COURT]
Higher rate of tax - Applicable rate of tax on the income of the assessee attributable to its PE in India - rate of tax to be charged i.e. rate of tax on foreign company @ 40% or rate of tax on the domestic company @ 30% - HELD THAT:- As relying on assessee's own case assessee cannot be regarded as treated less favourably by taxing at a higher rate. As a result the appeal of the assessee on this ground is dismissed.
TP Adjustment - Receipt of guarantee commission - assessee while benchmarking its international transactions in the transfer pricing report applied combined approach and has benchmarked under TNMM method - HELD THAT:- The evaluation of the beneficiary for the creditworthiness of the customers was performed by the overseas branches, whereas the assessee had limited role in issuing letter of guarantee, it received 1% guarantee commission. In these facts, there is no merit in comparing the rate received by the assessee with the rate charged by different banks who are operational in India and providing financial guarantee to its customers, with all risk involved therein
Assessing Officer/TPO erred in applying the rate charged by Axis Bank, Canara Bank, Punjab National Bank and State Bank of India, etc. with arithmetic mean of 2.71% to benchmark the international transactions between the assessee and its overseas branches of receipt of bank guarantee commission. The details of the international transaction are tabulated in the order of the TPO itself and the same clearly reflect that no transaction is undertaken except with overseas branches. The assessee undoubtedly is also providing the services to its customers in India where it a risk bearing entity. We are of the view that where the assessee has undertaken bundle of international transactions with its AE and the same has been benchmarked by applying combined approach and the method of TNMM has been used and the margins shown by the assessee have been accepted; then there is no merit in segregating the international transaction of the receipt of the guarantee commission and benchmarking the same separately. The margins of the combined approach has been accepted at Arm’s Length. Consequently, there is no merit in the transfer pricing adjustment made in the hands of the assessee. The same is thus directed to be deleted.
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2020 (5) TMI 664
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - operational debt - existence of debt and dispute or not - HELD THAT:- Written communication under Form 2 reveals that there is no disciplineary proceedings pending against the proposed IRP. That being so, the operational creditor succeed sin proving that the application under sub-sec. (2) of Sec.9 of IBC ode 2016 is complete; that there is no payment of the unpaid operational debt and that there is service of demand notice with invoices. Despite receipt of the demand notice, the reis no payment on the side of the corporate debtor, no pre-existing dispute, also alleged or proved. The Ld. Counsel for the CD not raised any dispute at the time of hearing, of her than his request for time to settle the matter. There is no disciplinary proceedings pending against the RP proposed under sub-sec.(4)of Sec.9 of IB Code, 2016 and accordingly this application is complete and therefore, liable to be admitted.
Application admitted - moratorium declared.
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2020 (5) TMI 663
Approval of Resolution Plan - section 30(6) of the Insolvency Bankruptcy Code 2016 - HELD THAT:- The Resolution Plan is in conformity of section 30 (2) of the IBC and Regulation 38 of the CIRP Regulations. The Resolution Plan also includes the mandatory contents of the Code.
In the vogue of the current pandemic COVID-19 Virus, the RBI announced "Developmental and Regulatory Policy" in the public interest. The Reserve Bank of India (RBI) announced an extension of the moratorium on loan EM's by three months, i.e. August 31,2020 vide statement on Developmental and Regulatory Policies which sets out various developmental and regulatory policy measures to improve the functioning of markets and market participants; measures to support exports and imports; efforts to further ease financial stress caused by Covid-19 disruptions by providing relief on debt servicing and improving access to working capital; and steps to ease financial constraints faced by State Governments - In view of the relaxation so granted by R.B.I as "Developmental and stated above, the claim of Resolution Applicant in Regulatory Policies", respect of the concession /relaxation in the time line for payment to its Financial Creditors/Operational Creditors/Other stakeholders, if any, is genuine and bonafide, therefore, Resolution Applicant deserves relaxation/concession. Such relaxation in the time frame or timeline for payments is/are not going to change the nature and character of the Plan, moreover such concession/modification is approved by UCO Bank having 83.31% stake, while SBI is having 16.69% stake, but UCO Bank has approved the relaxation, so sought for by the resolution applicant in timeline for the payment. However, SBI though approved its first tranche of payment but have reservation in 2nd tranche of payment.
It is needless to mention herein that, the very object of the IBC is, "Resolution is the rule and Liquidation is an exception", liquidation brings the life of a Corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only, if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code', therefore does not allow liquidation of a corporate debtor directly. It allows liquidation only on failure of 'Corporate Insolvency Resolution Process'.
This Adjudicating Authority, is of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (COC) meets the requirements as provided under section 30(2) of the Code, along with revised/concession/relaxation, so sought for, by Resolution Applicant on the timeline of payment to Financial Creditors/Operational Creditors and/or other stakeholders, as the case may be, which also became part and parcel of Resolution Plan dated 12.02.2020 - Resolution plan approved.
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2020 (5) TMI 662
Transfer pricing adjustment to the international transaction of provision of software development services - Comparable selection - HELD THAT:- Assessee is into developing software for the associated enterprises thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2020 (5) TMI 661
TP Adjustment - exclusion of M/s.Infosys Ltd., M/s.E-Inforchips Ltd., E-Zest Solutions Ltd. and EClerx Services Ltd. as comparables for the transfer pricing exercise - HC decided issue in favour of assessee - HELD THAT:- No reason to interfere in the matter. The special leave petition is, accordingly, dismissed.
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2020 (5) TMI 660
Reduction of share capital - Section 66(1) of the Companies Act, 2013 - Section 66(1) of the Companies Act, 2013 - HELD THAT:- Section 66(3) of Companies Act, 2013 states that no application for reduction of share capital shall be sanctioned by the Tribunal unless the accounting treatment, proposed by the company for such reduction is in conformity with the accounting standards specified in Section 133 or any other provision of this Act and a certificate to that effect by the company's auditor has been filed with the Tribunal.
We have perused the minutes of the Annual General Meeting of the company held on 19.08.2019 (page 123 to 126 of the paper book). Page 123 of the Paper book records that "With the consent of the Members present, Mr. Balvinder Sahrawat was elected to chair the meeting." On Page 124 of the paper book, it is recorded that the meeting has passed the resolution for reduction of capital "as an ordinary resolution". The minutes of the meeting have been signed by the Chairman of the meeting on pg 126 of the paper book - thus, the company has not met the specific requirement of Section 66 of the Companies Act by passing 'Special Resolution' for reduction of share capital. The Company has also not complied with the requirements of its own Articles of Association.
Petition dismissed.
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2020 (5) TMI 659
Jurisdiction - power of Authority to implead - It is the contention of the Appellant that the impugned order bristles with numerous infirmities and that the Adjudicating Authority does not possess the powers to pass an order, which was in the 'nature of rule' under the guise of an 'order' - HELD THAT:- It is axiomatic principle in law that if a third party is concerned with a dispute, that party is to be arrayed as a necessary or proper party to the adjudication of main issue centering around the dispute. Besides this, an opportunity of hearing is to be given to a third party to explain its stand. Suffice it for this Tribunal to make a pertinent mention that the rules of 'principles of Natural Justice' are to be adhered to by the Tribunal because of the latent and patent fact that the act of Tribunal/ Court/ Competent Authority shall cause no harm to any person - Of course, the 'principles of natural justice' are not the edicts of a statute. The 'principles of natural justice' are not to be imprisoned in a straight-jacket cast-iron formula. Notwithstanding the same, observing the tenets of natural justice is of paramount importance in the considered opinion of this Tribunal.
In fact, 'impleadment of parties' is only a matter of fact and not a matter of Law. Addition of parties/ striking out parties of course, is a matter of discretion to be exercised by a Tribunal/ Court based on sound judicial principles. The said discretion can be exercised either on the application of a Petitioner/ Respondent or suo-motu or on the application of a person who is not a party to any pending proceedings. However, the said discretion cannot be exercised in a cavalier and whimsical fashion.
In the present case, the 'Ministry of Corporate Affairs' was neither arrayed as a party nor impleaded in the subject matter before the Adjudicating Authority. Also, that the 'Registrar of Companies' had not filed any response/ reply/ counter (in respect of the clarification sought for) prior to the passing of the impugned order. An Adjudicating Authority (National Company Law Tribunal) has a quasi-judicial one is to abide by the principles of 'Natural Justice'. After providing a reasonable opportunity of being heard to the other side, the Tribunal can pass appropriate orders. If an order is passed by the Tribunal, without affording an opportunity of hearing to the parties, the same is unsustainable in Law.
Appeal allowed.
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2020 (5) TMI 658
Settlement Commission order - Madras High Court jurisdiction to look into the matter - valid reason to come to the conclusion that the relief under Section 80HHC is not required to be computed - HELD THAT:- This Court is not inclined to go into the merits of the case since the petitioner herein and the assessing authorities are at Bangalore and merely because the order under challenge had been passed by the Chennai Bench of the Settlement Commission, the cause of action cannot be said to arise within the territorial jurisdiction of this Court, when the events leading to the filing of the proceedings before the Chennai Bench of the Settlement Commission and the parties to such proceedings are outside the territorial jurisdiction of this Court and hence it would not be appropriate to entertain this writ petition by this Court.
Taking note of the principles enunciated in the above decisions and taking note of the fact that the petitioner herein and the assessing authorities are at Bangalore, as already observed above, it would not be appropriate for this Court to entertain this writ petition and accordingly the writ petition is dismissed, however, leaving it open to the petitioner to approach the High Court of Karnataka, for appropriate relief.
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2020 (5) TMI 657
MAT applicability u/s 115JB - Provision for leave encashment - pension which are unascertained liabilities and deserves to be disallowed which computing income under section 115JB - HELD THAT:- Substantial question of law No.2 is answered by a Division Bench of this Court in M/S. ING VYSYA BANK LIMITED [2020 (1) TMI 1116 - KARNATAKA HIGH COURT] wherein held Companies Act, 1956 has excluded insurance, banking companies or the companies engaged in the generation or supply of electricity from the purview of Section 211(1) of the Companies Act, 1956 and resultantly from the purview of Section 115JB of the Act.
Deduction u/s 80IA - Whether tribunal’s order can be said as perverse in nature in not adjudicating issue pertaining to 80IA deduction even though same is pleaded by Revenue? - HELD THAT:- Issue pertaining to Section 80IA of the Act, the Tribunal has followed the order passed in the previous assessment year 2007-08 [2013 (10) TMI 1505 - ITAT BANGALORE] and the same is answered against the Revenue. Therefore, in view of the preceding analysis, no substantial questions of law arise
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2020 (5) TMI 656
Application for settlement of cases u/s 245C - whether the 1st respondent Settlement Commission was justified in admitting the case of the 2nd respondent for settlement? - whether the 2nd respondent was entitled to file an application for settlement of cases u/s 245C as amended with effect from 01.06.2007, for the Assessment Years 2008-09, 2010-11, 2011-12 and 2012-13? - HELD THAT:- In the present case, when the application was filed on 27.4.2012 to settle the case under chapter XIX A of the Income Tax Act, 1961, case was pending.
Since the time for completion of assessment under section 153 of the Income Tax Act, 1961 had not expired as far as assessment years 2010-11, 2011-12 and 2012-13 when the application was filed Commission, it would be safe to hold that the case was pending before the Assessing Officer and therefore, the application was maintained under Chapter XIX-A of the Income Tax Act, 1961.
Therefore of the view that there is no merits in the contention of the petitioner that the application filed for settling the case was without jurisdiction under the aforesaid Chapter of the Income Tax Act, 1951 as far as these three AYs.
As far as AY 2008-09 is concerned, the last date for completing the assessment in terms of section 153 expired on 31.12.2010. However, for this Assessment Year also no assessment order was passed by AO.
If Circular No.3 of 2008 dated 12.03.2008 is applied, assessment is deemed to have been completed on the date of service of assessment on the 2nd respondent applicant.
If Circular No.16/2014[F.No.142/14/2007- TPL(PART)] dated 17.11.2014 is applied, assessment shall be deemed to have been completed on the date on which the assessment order is passed.
Only after the statutory amendment in 2015, restriction have been imposed. However, such restriction cannot be retrospectively made applicable to the application filed in 2012. The fate of the application is to be decided in the light of the provision as it stood in 2012. Subsequently, though the Explanation to Section 245A of the Act was amended, it cannot be made applicable retrospectively.
1st respondent Settlement Commission has therefore correctly entertained the application of the 2nd respondent. If the application was disposed then and there, there was no scope for confusion based on the plain reading of the provision.
Find no merits in the challenge to the impugned order. - Therefore dispose the present writ petition and direct the 1st respondent Settlement Commission to pass appropriate order on merits and bring a closure to the application filed by the 2nd respondent under Chapter XIX-A of the Income Tax Act, 1961, within a period of six months from the date of receipt of a copy of this order.
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2020 (5) TMI 655
Exemption u/s 11 - hostel receipt to be treated as business income of the trust in absence of not maintaining separate books of accounts as per section 11 (4A) - assessee has not maintained separate books of account of hostel activity as assessee is running a hostel and every year surplus is generated - HELD THAT:- In this case , it is not denied that student who pays the hostel fees do not get education in classrooms - Assessee is running educational institutes , income from which has been accepted by ld AO himself as falling u/s 2 (15 ) of the act. We direct the learned assessing officer to not to treat the excess as taxable income on account of hostel receipts under section 11 (4A) of The Income Tax Act. As hostel fee income is subservient to the main object of the education and therefore the learned assessing officer is directed to treat the same as not a business income but income derived from the charitable activities of "education". - Decided in favour of assessee.
Depreciation to assessee trust - additional ground - double deduction - HELD THAT:- The assessment year in appeal before us is assessment year 2011 – 12, which is prior to assessment year 2015 – 16 where from the amendment has been made denying the double deduction. Therefore, for this year the assessee is entitled to the depreciation allowance. Accordingly, additional ground raised by the assessee is allowed.
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