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Showing 61 to 80 of 2008 Records
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2019 (5) TMI 1948 - PUNJAB AND HARYANA HIGH COURT
Classification of account as Non-Performing Asset (NPA) - disbursing power sanction to a borrower can be altered/reduced or not - principles of natural justice in the form of an opportunity are required to be provided to the borrower - Position of cash credit or term loan - When can the disbursing power be altered/reduced and whether principles of natural justice in the form of an opportunity are required to be provided to the borrower before doing so? - HELD THAT:- The disbursing power sanctioned to a borrower is the limit upto which the borrower can utilize the facility of the sanctioned loan. It is generally sanctioned on the basis of the value of the hypothecated stock and book debts which are taken as tangible secured asset. The borrower is obligated under the disbursing power to maintain minimum level of stocks and book debts to safeguard the financial interest of the financial/banking institution. It is required to submit its stock statements and other relevant information periodically and regularly for the verification of the lender. Any default on the part of the borrower to adhere to these norms entitles the creditor to alter/reduce the disbursing power - due opportunity of hearing and explaining the factual position alongwith documentary proof is required to be given to the borrower to support his claim. The decision is based on the principle enunciated in audi alterm partem. The principles of natural justice are required to be followed when a quasi judicial body engages in determining disputes between the parties or administrative action is taken which involves civil consequences.
Further, sub-section (2) of Section 13 of the SARFAESI Act provides for giving a notice by the secured creditor to the borrower in writing to discharge his liability to the secured creditor within 60 days from the date of notice failing which the provision has been made for entitling the secured creditor to exercise all or any of the rights under sub section (4) of Section 13 of the SARFAESI Act - In MARDIA CHEMICALS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 294 - SUPREME COURT], the Supreme Court clearly emphasized the need of serving a notice upon the borrower under sub-section (2) of Section 13 of the SARFAESI Act so that an opportunity is provided to the borrower for explaining the reasons within sixty days for not initiating action under sub-section (4) of Section 13 of the SARFAESI Act. It was observed that the objective of the issuance of notice under Section 13(2) of the SARFAESI Act and providing an opportunity to the borrower was to ensure that there was fair consideration of some meaningful objection raised by the borrower, if any, before affecting his rights.
It is concluded that in view of the principles of equity and natural justice, an opportunity is required to be provided to the borrower before the creditor modifies or reduces the disbursing power.
Whether cash credit limit or term loan once declared NPA, can it be restored as standard account? - HELD THAT:- The Supreme Court in M/S SARDAR ASSOCIATES & ORS. VERSUS PUNJAB & SIND BANK & ORS. [2009 (7) TMI 1274 - SUPREME COURT] while examining the nature of supervisory power of Reserve Bank of India in the matter of functioning of Scheduled Banks concluded that a distinction must be made between statutory and non-statutory guidelines. Further, the mandate of Banking Policy and directions issued by Reserve Bank of India in public interest or in the interest of the depositors are required to be followed by the Banking company. In other words, they are equally bound to comply with all the guidelines issued by the Reserve Bank of India.
Where the borrower expresses willingness for regularizing the loan account by discharging the arrears of interest and principal, the Bank/financial institutions are obligated to accept the same as per mandate expressed in the Master Circular dated 01.07.2015 issued by the Reserve Bank of India in exercise of powers under the 1949 Act and declare the account to be 'Standard' account.
The action of the respondent is legally unsustainable. Undisputedly, the petitioner had availed cash credit facilities from the respondent Bank since 2007 against the company stock statements and book debts. Collateral security was given in terms of factory, land and building by the petitioner to fully secure the cash credit facility. The Bank was renewing the contract yearly. Suddenly on 27.6.2018, the Bank informed the petitioner that its account had been declared NPA by the statutory auditor and was directed to deposit the entire outstanding amount in the account. The reasons given by the Bank were that the company was incurring loss from its core activity for which the Bank had financed; the petitioner company was misusing the capital advanced to earn interests which was not directly related to the manufacturing activity of the company. The petitioner was not afforded any opportunity before reducing the disbursing power and declaring the account as NPA. Further, as per clauses 4.2.4 and 4.2.5 of the Master Circular dated 01.07.2015 issued by the RBI, the petitioner could remove the temporary deficiencies in the maintenance of account as standard and to upgrade the account so as to be out of NPA.
The irresistible conclusion is that notice was required to be issued to the petitioner under the provisions of the SARFAESI Act by the Bank before declaring its account as NPA - Matter is remanded to the respondents to take a decision afresh in accordance with the guidelines issued by the Reserve Bank of India termed as RBI's prudential norms of income recognition, asset, classification and provisioning pertaining to advances after affording an opportunity to the petitioner - petition allowed by way of remand.
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2019 (5) TMI 1947 - ITAT PUNE
Benefit of exemption u/s 10(23C)(vi) - denial of claim as assessee has not submitted requisite form for claiming the aforesaid exemptions - appellant has been submitting form 56D (for claiming exemption u/s 10(23C)(vi)) from time to time - CIT(A) ought to have appreciated that the procedure adopted by the appellant was in tandem with the footnote & action point given at the end of form 56D - whether appellant is existing solely for imparting education? - HELD THAT:- Tribunal vide different orders relating to assessment years 2005-06 and 2007-08 have held that it is case of deemed approval where the application was not disposed of within stipulated time and hence, the assessee was eligible to claim exemption under section 10(23C)(vi) of the Act. The year under appeal before us is assessment year 2006-07 and the assessee is also relying on the said application dated 13.03.2006 filed before the Commissioner which was not disposed of within time and the case of assessee is that deemed approval is thus, granted to the assessee and the assessee is eligible to claim exemption under section 10(23C)(vi) of the Act. We find merit in the plea of assessee.
Rule 2 provides that application for approval shall be made in Form 56D by the institution and clause 3 provides that approval of CBDT or the Chief Commissioner or the Director General, as the case may be, shall at any one time have effect for a period not exceeding three assessment years. Explanation to Rule 2CA provides that for the purpose of this rule, the Chief Commissioner or Director General means the Chief Commissioner or Director General to whom the Assessing Officer having jurisdiction to the assessee, is subordinate. It is also provided that application has to be made to the Commissioner, who in turn, shall forward the same to Chief Commissioner or the Director General.
Taking the stock of the factual aspects of the case, application in Form No.56D was filed before the CIT-5, Pune on 13.03.2006, under which the assessee is seeking exemption for block of three years starting from assessment year 2005-06 and 2007-08. The Tribunal for assessment years 2005-06 and 2007-08 have already held the assessee entitled to the aforesaid exemption. Consequently, we hold that the assessee is also entitled to claim the aforesaid deduction for the intervening year i.e. for assessment year 2006-07 and direct the Assessing Officer to compute the income in the hands of assessee after allowing exemption under section 10(23C)(vi) of the Act. Thus, the grounds of appeal raised by assessee are allowed.
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2019 (5) TMI 1946 - DELHI HIGH COURT
Murder - Seeking leave to appeal - acquittal of charge punishable under Sections 302/120-B/380/411 of the Indian Penal Code - star witness - HELD THAT:- Criminal Jurisprudence and a plethora of judicial precedents which place the basic principles not to convict a person on the basis of last seen theory because it is a very weak kind of circumstantial evidence and it is very well affected by a number of factors i.e. the gap between last seen, the time of death and other surrounding factors. The last seen theory is required to be proved by established facts before the same can be actually weighed for the purpose of its relevance for ascertaining the guilt of the accused persons. ‘Last seen together’ can only be treated as an additional link in the chain of circumstances because the prosecution has to establish an unbroken chain of circumstances, which leads to only one conclusion, which is the guilt and culpability of the accused persons.
The Hon’ble Apex Court in NIZAM VERSUS STATE OF RAJASTHAN [2015 (9) TMI 1449 - SUPREME COURT], has held that the conviction on the basis of ‘last seen theory’ should be enforced keeping in mind the circumstances that precede the alleged incident.
Whether evidence adduced by the prosecution, particularly the testimony of the star witness (PW-3) is trustworthy, credible and worthy of reliance who had “last seen” the accused persons with the deceased? - HELD THAT:- The conduct of the witness also appears to be unnatural as after seeing the dead body of her father-in-law, she neither informed her husband nor her brother-in-law and instead of informing any public person outside her house, she crossed the gali and informed about the death of her father-in-law to her ‘chacha’ and ‘chachi’, which creates a doubt in the version of the prosecution - The post mortem and FSL report proved that the death was caused due to ‘asphyxia haemorrhage consequent upon cut throat injury by a sharp weapon’ and the same was sufficient to cause death in ordinary course of nature but as discussed above, the testimony of PW-3 (Pooja) with regard to the last seen theory is very weak and the prosecution has failed to connect the accused persons with the commission of crime.
In the present case, on a cumulative reading and appreciation of the entire evidence on record, we are of the considered view that the evidence on record has been held to be unworthy of acceptance as the same is found to be replete with infirmities and are not supported with testimony of any independent witness. There are considerable inconsistencies and discrepancies in the statement of the witnesses, which consequently creates reasonable doubt on the case of prosecution. No motive has been proved on record by the prosecution to substantiate the involvement of the respondents in the present case.
It is a settled law that while deciding a leave to appeal petition filed by the State, in case two views are possible, the High Court must not grant leave, if the trial court has taken one of the plausible views, in contrast there to in an appeal filed against acquittal. Upon re-appraisal of evidence and relevant material placed on record, in case, the High Court reaches a conclusion that another view can reasonably be taken, then the view, which favour’s the accused, should be adopted unless the High Court arrives at a definite conclusion that the findings recorded by the trial court are perverse, the High Court would not substitute its own views on a totally different perspective.
Petition dismissed.
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2019 (5) TMI 1945 - ITAT SURAT
Addition on account of long term capital gain u/s 50C - price determined for Adoption of stamp duty valuation - Scope of amendment to section 50C - as submitted that the sale price determined in the impugned sale agreement was determined on the basis of Jantri Value prevailing on the date of agreement and further that the terms of payment of the sale consideration was also agreed upon in the said same agreement - HELD THAT:- The facts of the case are not in dispute and after having perused both the agreement to sale as well as the registered sale deed we do not find any apparent contradictions between the two set of documents in so far as the quantum of consideration is concerned.
The registered sale deed makes a mention of the agreement to sell and duly records that an amount of Rs.1,14,00,000/- had already been paid to the seller/assessee at the time of execution of the agreement to sell. We also note that there is no inference by the department that an amount more than the sale consideration as shown in the agreement to sell and/or the sale deed had exchanged hands.
Whether the assessee is entitled to the benefit of provisos to section 50C of the Act which as per the Finance Act 2016 was to take effect from 01.04.2017? - Admittedly, the year under consideration is assessment year 2012-13 and if the amendment is held to be coming into force from 01.04.2017 then the assessee will not get the benefit of provisos. However, the Co-ordinate Benches in Ahmedabad in a number of cases have held that this amendment was to be taken as being retrospective in effect with effect 01.04.2003. The lead case in this regard is Dharamshibhai Sonani [2016 (9) TMI 1259 - ITAT AHMEDABAD] wherein it has been held that the provisos to section 50C were effective from 01.04.2003. The Department has not produced any judgment or order to the contrary and, therefore we hold that since the amendment to section 50C is retrospective in nature, the assessee will be entitled to relief in the present appeal.
Accordingly, we restore the issue to the file of the Assessing Officer with a direction to verify as to whether the registered agreement to sale as claimed by the assessee was actually executed on 06.09.2011 and the partial sale consideration of Rs.1,14,00,000/ was received through banking channels. If these two claims of the assessee stand verified, the Assessing Officer will, thereafter, for the purpose of computation of capital gains, adopt the stamp duty valuation as on 06.09.2011 appeal of the assessee stands partly allowed for statistical purposes.
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2019 (5) TMI 1944 - CHHATTISGARH HIGH COURT
Maintainability of appeal on low tax effects - monetary limit to file appeal before high court - HELD THAT:- In the present Income Tax Appeal the tax effect assessed by the Department is at about Rs.28,25,234/-. The Central Board Direct Taxes (CBDT) has issued a circular on 11-7-2018 deciding that the Department Appeals may be filed on merits before the Income Tax Appellate Tribunal, High Courts and SLPs/Appeals before the Supreme Court keeping in view the monetary limits stating further that henceforth appeals/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits provided in para 3 of the circular. For appeals before the High Court the monetary limit is Rs.50,00,000/-. The circular dated 11-7-2018 has been made effective retrospective vide para 13 thereof.
In view of the CBDT circular, since in the present appeal the tax effect is below the monetary limit, the same is dismissed. However, the question of law raised in the appeal shall remain open for decision in an appropriate case.
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2019 (5) TMI 1943 - ITAT KOLKATA
Income from house property - addition being deemed rental income for a let out property which has remained vacant - ALV determination - disallowing vacancy disallowance claimed by the assessee - HELD THAT:- CIT(A) has wrongly relied on the judgment of the Hon’ble Andhra Pradesh High Court in the case of Vivek Jain [2011 (1) TMI 897 - ANDHRA PRADESH HIGH COURT] This judgment was prior to the amendment brought in the Act on this issue.
In view of the above discussion, consistent with the view taken by the Pune Bench of the ITAT in the case of Shri Vikas Keshav Garud [2016 (7) TMI 942 - ITAT PUNE] we delete this addition.
Addition made u/s 2(22)(e) - addition as the account in question is a current account or loan account - HELD THAT:- We find that the accounts of the assessee in the books of M/s. Panchdeep Constructions Ltd. is placed page 11 of the paper book filed by the assessee. A perusal of the same demonstrates that, it is a current account. Entries were passed on the last day of the previous year i.e., 31/03/2013. Even the Director’s remuneration has been credited on the last day of the Financial Year. As per the case of Mr. Purushottam Das Mimanidelete [2014 (12) TMI 801 - ITAT KOLKATA] the addition as the account in question is a current account and it is not a loan account. Moreover, it can be seen that the company M/s Panchdeep Constructions Ltd. received money from the assessee which makes it a commercial transaction of mutual benefit to both the parties and hence outside the purview of Section 2(22)(e) of the Act. Accordingly this ground of the assessee is allowed.
Disallowance of interest - assessee’s case is that the Assessing Officer restricted the claim of the assessee of deduction of interest to the extent of income earned by it under the head income from other sources - Whether assessee claims, is factually incorrect as the interest payment is related to income offered under the head income from house property? - HELD THAT:- Computation of income that rental income has been offered to tax under the head income from other sources and has been assessed as such. This, in our view, is not correct. The rental income may have to be brought to tax under the head income from house property if it is rent from a building. The claim for interest may be examined afresh under such circumstances. If the money borrowed is for the purpose of acquisition of property, the deductions should be considered only under the head house property. Accordingly, this issue is restored to the file of the Assessing Officer for fresh adjudication in accordance with law.
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2019 (5) TMI 1942 - ITAT BANGALORE
T.P adjustment - Corporate Guarantee given to the subsidiary company of the assessee - International transaction - TPO determined the interest rate difference accruing to the Subsidiary company on account of Corporate Guarantee given by the assessee as 4% - TPO made T.P adjustment @ 2% on the amount of Corporate guarantee given. The Ld DRP also confirmed the same - HELD THAT:- We notice that the Tribunal is consistently holding the transaction of providing Corporate Guarantee as an international transaction. Hence the same is required to be examined under Arms length principles. There should not be any dispute that the provision of Corporate guarantee to its subsidiary in order to enable it to avail loans would bring benefit to the subsidiary, in which case, it is proper to compensate the assessee for those benefits under Arms length principles. We notice that the TPO has made an adjustment of 2%, considering the interest benefit @ 4% and taking the view that half of the same should be attributed to the benefit of the assessee.
Hon'ble Bombay High Court has approved the T.P adjustment of 0.50% in respect of Corporate guarantee given in the case of Everest Kento Cylinders Ltd [2015 (5) TMI 395 - BOMBAY HIGH COURT]. Though the Ld A.R has pleaded for an adjustment of 0.20% by placing reliance on the decision of Asian Paints Ltd [2014 (1) TMI 16 - ITAT MUMBAI] yet we notice that the Ld A.R did not highlight the parity of facts between the assessee and the case of Asian Paints Ltd. Hence, on a conspectus of the matter, we are of the view that the T.P adjustment in respect of Corporate Guarantee may be made @ 0.50% as per other decisions of Tribunal and Hon'ble Bombay High Court referred above. Accordingly we set aside the order passed by the AO on this issue and direct the AO/TPO to make T.P adjustment in respect of Corporate Guarantee @ 0.50% in all the years under consideration.
Disallowance made u/s 14A - Sufficiency of own funds as in excess of value of investment - HELD THAT:- The Hon'ble Bombay High Court has held in the case of HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] that no disallowance out of interest expenditure u/r 8D(2)(ii) is called for when own funds available with the assessee is in excess of the value of investments. Accordingly we direct the AO to compare the own funds available with the assessee against the value of investments and accordingly apply the provisions of Rule 8D(2)(ii) by duly following the decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd (supra).
In respect of disallowance to be made u/r 8D(2)(iii) out of administrative expenses, the Special bench of Tribunal has held in the case of Vireet Investments Ltd [2017 (6) TMI 1124 - ITAT DELHI] that only those investments, which have yielded exempt income should be considered. Accordingly we direct the AO to compute the disallowance u/r 8D(2)(iii) accordingly.
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2019 (5) TMI 1941 - ITAT RAIPUR
Disallowance u/s 40(a)(ia) for non-deduction of tax on finance charges paid to NBFCs - HELD THAT:- As decided in own case [2018 (1) TMI 1685 - ITAT RAIPUR] information was not available with the AO Considering the overall aspect of the fact that NBCSs have offered its income, the matter has to be verified by the AO - we set aside the order of the Ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for verification of the certificates of the Chartered Accountants. AO shall grant reasonable opportunity of hearing to the assessee in accordance with law. Hence, ground No.1 raised in appeal by the assessee is allowed for statistical purposes.
Addition of labour payments - in-genuine payment - HELD THAT:- We observe that the Revenue has not conducted any specific enquiry or has not brought in any material on record to substantiate that these labour payments were not genuine. Just because thumb impression is there, it cannot be said that the transactions were not genuine since in India when the dealing is done with labourers, practicality demands that the money receipt is the thumb impressions to the concern labourers. Revenue should bring out cogent material for making such disallowances - As relying on [2014 (12) TMI 1397 - ITAT RAIPUR] tax liability cannot be fastened to the assessee by the AO without bringing some positive evidence against the assessee on record, that the disallowance of addition has to be backed by some documentary/oral evidence which could prove that the claim made by it of an expenditure was not genuine. In the case under consideration, the AO has made a lump sum disallowance, but same is not backed by any evidence. Considering the peculiar facts and circumstances of the case under consideration, we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity - Decided in favour of assessee.
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2019 (5) TMI 1940 - HIMACHAL PRADESH HIGH COURT
Dishonor of Cheque - compounding of offences - requirement of consent of both the parties - HELD THAT:- This question is no longer res integra in view of the judgment rendered by the Hon’ble Supreme Court in M/s. Meters and Instruments Private Limited and another versus Kanchan Mehta, [2017 (10) TMI 218 - SUPREME COURT] wherein after taking into consideration the entire law on the subject, the Hon’ble Supreme Court specifically held that even though compounding requires consent of both parties, however, in absence of such consent, the Court, in interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.
The petitioner is acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act - the amount of Rs.36,000/- lying in deposit before the learned trial Court is ordered to be released in favour of respondent No.1 on his furnishing his bank account before the concerned Court - revision petition allowed.
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2019 (5) TMI 1939 - GUJARAT HIGH COURT
Utility of demanding and insisting for revenue neutral demands - settlement commissioner instead of addressing to it has gone on altogether an alien issue which would not in fact amounting to examining the proposal for settlement and that has rendered final order of the settlement commission vulnerable - HELD THAT:- The settlement commissioner ought to have adverted to the emphasis laid upon the revenue neutrality in the submission and it was expected of giving its reason thereon, lack thereof would prima facie amounts to non application of mind qua the prayer for settlement on the permissible ground.
By ad-interim-relief, the respondents shall be restrained from taking any precipitative action pursuant to the order impugned in this petition.
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2019 (5) TMI 1938 - CESTAT MUMBAI
Reversal of CENVAT Credit - Ocean Freight - It appeared to revenue that Ocean Freight was not defined in taxable service under section 65 (105) of the Finance Act, 1962, till 30.06.2012, and from 1.7.2012, Ocean Freight appeared in negative list under section 66D(p) of the Finance Act, 1944, as a non-taxable service - HELD THAT:- Rule 2 (e) of Cenvat Credit Rules Credit Rules, which defines exempted service, have been substituted from time to time and finally it was clarified by way of substitution, with effect from 1 March 2016, that exempted service does not include Ocean Freight. It is held that the said explanation and/or clarification relates back to the date since the said rule exists on the statute. Accordingly the show cause notice is not sustainable.
It is also held that show cause notices issued are by way of change of opinion. Further there is no case made out of any suppression of facts or contumacious conduct, as the transactions were duly found recorded in the books of accounts maintained in the ordinary course of business.
The appeal is allowed and the impugned order is set aside. The Appellant is entitled to consequential benefits in accordance with law. It is also held that under the facts and circumstances there being no allegation of taking of ineligible Cenvat Credit, it is held that Rule 14 of CCR is not attracted.
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2019 (5) TMI 1937 - SUPREME COURT
Entitlement of Teachers working in private aided educational institutions in the State of Madhya Pradesh to the benefit of enhanced age of superannuation of 65 years - HELD THAT:- There is no manner of doubt that the Coordination Committee has the power to prepare, amend and repeal the Statutes. It can do so on its own motion or on receiving a proposal from the Executive Council of a University. The procedure to be followed in case there is a proposal from the Executive Council of the University to frame Statutes is prescribed thereunder. A plain reading of Section 36 would make it clear that the views of the Executive Council have to be obtained by the Coordination Committee only in case the proposal has emanated from the Executive Council of a University for preparing a Statute. Such procedure is not applicable when the Coordination Committee prepares a Statute on its own motion.
Admittedly, the amendment to Statute 28 of the College Code on 07.01.2004 was not based on any proposal from the Executive Council of any University. It was made by the Coordination Committee on its own motion. The interpretation of Section 34 (4) of the 1973 Adhiniyam by the High Court that the Coordination Committee can only suggest modifications of the said Statutes in force is not correct.
The High Court has gone wrong in observing that any proposal for amendment to a Statute made by the Coordination Committee has to be sent to the Executive Council of the University. The power to amend the Statute is conferred on the Coordination Committee and not on the Executive Council as has been understood by the High Court. A further error committed by the High Court was to hold that there is no recommendation of the Standing Committee on the basis of which a Resolution was passed on 07.01.2004. The High Court lost sight of the minutes of meeting of the Standing Committee dated 01.04.2003 by which recommendation was made to maintain the age of superannuation of Teachers working in aided private Colleges at par with those working in the Government Colleges.
It is clear from the facts that the matter pertaining to the age of superannuation of Teachers working in aided private Colleges was referred by the Coordination Committee to the Standing Committee. On the basis of the recommendations of the Standing Committee, the Coordination Committee passed a Resolution on 07.01.2004 which was given effect to by an amendment to Clause 26 of the College Code - The Standing Committee and the Coordination Committee of the University is represented by the Senior Officers of the State Government and it is not for the State Government to contend that they will not extend the benefit of enhancement of the age of superannuation till 65 years to the Teachers working in the private aided institutes in spite of the provisions in the College Code.
The Government of Madhya Pradesh are directed to pay salaries to the Teachers in aided private Colleges who are working and also those who have worked till they attained the age of superannuation of 65 years - appeal allowed.
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2019 (5) TMI 1936 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Seeking direction to release the attached property of Raman Ispat Private Limited (Corporate Debtor) attached by the Appellant - issuing direction to the Appellant for submitting their claims to the Liquidator of the Corporate Debtor appointed under Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Electricity Act, 2003 was enacted and came into force w.e.f. 26th May, 2003 when the I&B Code was not in existence - The decision of the Hon’ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd. [2008 (3) TMI 654 - SUPREME COURT] was also a decision prior to the I&B Code and related to the Electricity Act, 2003 wherein the Hon’ble Supreme Court held that the Electricity Act, 2003 will have overriding effect on the Arbitration and Conciliation Act, 1996.
In view of Section 238 of the I&B Code, the I&B Code will have overriding effect on all laws which are for the time being in force, including the Electricity Act, 2003 and Rules and Regulations framed thereunder - The I&B Code being a subsequent Act of parliament, the Electricity Act, 2003 cannot override any provisions of the I&B Code.
Section 238 of the I&B Code which is a subsequent parliamentarian law, which talks of overriding effect on all existing laws, therefore, it is held that the I&B Code will have overriding effect on the Electricity Act, 2003, if any of the provisions of the Electricity Act, 2003 is inconsistent with the provisions of the I&B Code - As per sub-section (5) of Section 33, when a liquidation order has been passed, no suit or other legal proceeding can be instituted by or against the Corporate Debtor. Though, a suit or other legal proceeding may be instituted by the liquidator, on behalf of the Corporate Debtor with the prior approval of the Adjudicating Authority.
If there is any amount due to any creditor, he can file claim before the Liquidator who is required to verify the claims under Clause (a) of sub-section (1) of Section 35 and thereafter, on consolidation of claims under Section 38. After verification of claims under Section 39, it is the Liquidator who is entitled to admit or reject the claim under Section 40 - the District Collector cannot initiate proceeding for any outstanding dues for supply of electrical energy nor can auction movable and immovable properties. Though it is open to the Electricity Authority of the Collector to file claim before the Liquidator.
Appeal dismissed.
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2019 (5) TMI 1935 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - definite amount and date of default, available or not - existence of debt and dispute or not - time limitation - HELD THAT:- In the present case, as it is not disputed that there is a debt which is more than ₹ 1 Lakh and the Corporate Debtor failed to pay the debt, we hold that the application under Section 7 was maintainable.
On 7th December, 2018, it is observed that prima facie there is no merit in the appeal but the counsel for the Appellant informed that the Appellant intends to settle the matter therefore the matter was adjourned time to time. Even after six months as the matter was not settled, the case was heard on merit - Mr. Vipul Ganda, learned counsel for the Appellant initially argued the case and subsequently submitted that Mr. Ashok Oswal is interested to argue the case on merit.
Inspite of the fact that the Appellant – Mr. Ashok Oswal has appointed the counsel, the Appellant are allowed to address the case on merit of the appeal. Mr. Ashok Oswal wanted to read written argument instead of arguing the case on merit. Nothing specific in his submission transpired. However, he is allowed to file written submissions by 8th May, 2019. The same have been filed on 8th May, 2019 vide Diary No. 11961. The written submission are repetition of the case put up by the Appellant which we have already referred in this Judgment earlier.
The appeal is dismissed.
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2019 (5) TMI 1934 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - filing simultaneously two claims under section 7 against principal borrower - petition is admitted against one company then another petition based on the same claim can be admitted or not? - HELD THAT:- If a petition is admitted against one company then another petition based on the same claim cannot be admitted. In other words, separate petitions, against different Corporate Debtors, for the same claim cannot be admitted simultaneously.
Here, since the petition against the Corporate Guarantor i.e. Dugal Projects Development Company Private Limited is admitted in CP 2527/2018 vide our order dated 08.05.2019, therefore, the present petition on the same claim cannot be admitted.
Petition dismissed.
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2019 (5) TMI 1933 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- As contended by the Respondent, the relief sought by the Applicant in the two legal notices dated 12.07.2018 and 03.11.2018 are contrary to each other and there is no clarity of purpose. It is obvious from this divergence that the parties, especially the Applicant, have not approached the Tribunal with clean hands, which requires that the present application be dismissed outright. Further, the agreement dated 01.04.2014 entered into by both the parties is very vague in nature and it does not indicate whether the money paid is towards the full cost value of the commercial space allotted or only for investment. The title says it is an investment agreement. Details such as date of completion of the project, interest component for the investment made by the Applicant, documentation formalities like registration of the property after completion of the project etc are totally missing. In the absence of such details it is very difficult to come to the conclusion whether there is debt and the date on which the debt becomes due.
The application fails and this Tribunal dismisses the application.
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2019 (5) TMI 1932 - ITAT AHMEDABAD
TP Adjustment - Addition for guarantee fees for providing a guarantee by the assessee on loan taken by its AEs during the year under consideration - HELD THAT:- Since in the case on hand, the Guarantee is not having "bearing on profits, income, losses or assets," therefore, respectfully following the same we are also of the opinion that such guarantee issued by the assessee is not covered under the definition of section 92B of the Act. Accordingly, we direct the TPO/AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed.
Disallowance of deduction u/s 35 (2AB) - disallowance of weighted deduction claimed by the assessee - HELD THAT:- We note that the issue raised by the assessee is covered against it by order of this tribunal in its case[2012 (7) TMI 273 - ITAT AHMEDABAD] thus find that the capital expenditure incurred by the assessee on purchase of motor cars cannot be considered as expenditure incurred by the assessee on in-house research & development and therefore, the same is not eligible for weighted deduction u/s. 35(2AB) of the Act. Similarly, capitalized interest on purchase of car is also not eligible for this benefit for same reasons because it is equal or similar to cost of car.
Administrative expenses between the eligible and non-eligible unit based on the turnover - HELD THAT:- These expenses are incurred by a company regardless of whether the company produces or sells anything, generates income or incurs a loss. Most of these expenses either are fixed or semi-fixed, and there is a limited scope to reduce them. The companies that have a centralized management system tend to have higher general and administrative expenses. On the contrary in the case of decentralizing system, certain functions are delegated to subsidiaries.
Similarly these expenses cannot be linked to any particular undertaking of the company in a case the assessee has more than one undertaking. Thus the dispute arises for the allocation of such expenses among the different unit/ undertaking of the assessee. Regarding the allocation, we are of the view that these expenses cannot be allocated based on the turnover. It is because the turnover of any undertaking is very much volatile and keep on changing depending upon the market forces, competition, Government policies, etc. There can be a situation that the turnover of one undertaking is very high in a particular year but in the subsequent year the turnover may go done or vice versa which will affect the pattern and consistency in the allocation of the administrative expenses and distort the presentation of the financial statements for different years. Therefore we are of the considered view that the basis of the allocation of administrative expenses based on the turnover is not advisable.
What should be the basis of the allocation of the said expenses in the given facts and circumstances. Generally, the human resources working in any of the undertakings of the assessee does not frequently change as the market forces do not regulate it, unlike the sales. Therefore in the given facts and circumstances, we are of the view that the allocation of the administrative expenses should be done based on the human resources engaged in the different undertaking of the assessee. - Decided in favour of assessee.
Addition on account of the expenses for Employee long term compensation plan ( for short ELTCP) - HELD THAT:- A.O. had disallowed the provision for leave encashment as no payment has been made against the said provision during the year. In the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] has held if a liability has been ascertained with a reasonable certainty and the actual quantification is not material to claim the expenditure.We do not find a reason to interfere in the order of the ld. CIT-A. Hence, the ground of appeal raised by Revenue is dismissed.
Depreciation at the rate of 60% on the items connected with the VSAT Allowed.
Deduction under section 80-IC - assessee in its ROI claimed a deduction u/s 80-IC in respect of its unit located at Baddi - HELD THAT:- There is no dispute about the facts of the case. Therefore we are not inclined to repeat the same for the sake of brevity and convenience. The issue in the instant case relates whether the expenditure incurred by the assessee on research under the head discovery cost and capital cost is to be allocated to the unit eligible for deduction under section 80IC of the Act.
The provisions of section 80IC of the Act mandates to claim the deduction in respect of eligible unit considering the income from such unit as only the source of income. The assessee in the case on hand has allocated the cost of research expenditure which was directly connected with its eligible unit. The assessee besides the direct cost has also incurred the cost of scientific research activity which did not materialize. Therefore the same was not allocated to the eligible unit as the same was not directly connected with the eligible unit. In our considered view the cost which is directly connected with the eligible unit is eligible for deduction while determining the deduction under section 80 IC of the Act.
AO in the subsequent assessment year 2008-09 has not allocated the cost on scientific research under the head discovery and capital cost to the eligible unit. Thus in our considered view the principle of consistency needs to be applied in the case on hand as held by the Hon’ble apex court in the case of Radhaswoami Satsang [1991 (11) TMI 2 - SUPREME COURT].
Disallowance on account of the donation under section 80G - whether the donation paid by the assessee under section 80G of the Act needs to be allocated to the unit eligible for deduction under section 80-IC? - HELD THAT:- The scheme of the Act provides to claim the deduction under section 80G of the Act after claiming all the deduction provided under chapter VI-A of the Income Tax Act. Therefore the assessee can claim the deduction on account of such donation only against the Gross Total Income after claiming all other deduction.
We further note that the donation paid by the assessee cannot be claimed as an expense in the profit and loss account as the same has not been incurred wholly and exclusively for the purpose of the business as provided under section 37(1) of the Act. Thus even if the assessee claimed the donation as an expense in the profit and loss account, then it has to be disallowed while computing the income under the head business and profession. Thus the only option available to the assessee to claim the deduction on account of such donation is only under the provisions specified under section 80G of the Act which can be claimed in the manner as discussed above.
Upward adjustment by the TPO/AO on account of interest on Loan given to AEs - determination of ALP of the interest amount on loan given by the assessee to its AE’s - HELD THAT:- Addition in the rate of interest on account the credit risk suggested by the TPO is not sustainable.
Basis of charging 0.50% margin from the AE - The assessee is charging margin at 37.50 bps from the AE which appears quite low as even the bank charges from the company having high net worth a margin of .50%. Therefore we are inclined to uphold the finding of the TPO for charging the margin at .50% over and above the 6 month average labor rate. In effect, the rate of interest charged by the assessee from the AE shall increase by 12.5 bps. Thus the ground of appeal of the assessee is partly allowed.
Disallowance in respect of the expenditure incurred on the purchase of a motor car which was claimed as deduction under section 35(2AB) - HELD THAT:- CIT (A) has held that entertainment expenses claimed by the assessee were not incurred in connection with the scientific research activity without adducing any reason thereon. As such the submission of the assessee filed before the learned CIT (A) stating that the entertainment expenditures were incurred in respect of the professionals who visited the research center, has not been challenged based on any reasoning.AO has allowed 100% deduction in respect of such expenditure which proves that the expenditure incurred in connection with the business activities of the assessee. Such claim of the assessee was allowed under section 35(2AB) of the Act but at the rate of 100% instead of 150% i.e. weighted deduction.
Therefore we are not inclined to uphold the finding of the authorities below. Hence we reverse the order of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
Deduction u/s 80IC - whether the miscellaneous income such as Penalty Received from Supplier, Discount Received from Vendors and Export Benefits are eligible for the deduction u/s 80IC? - HELD THAT:- We hold that the assessee is eligible for deduction in respect of the income as discussed above under section 80 IC of the Act. Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed, and the Revenue is dismissed.
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2019 (5) TMI 1931 - ITAT MUMBAI
Rectification application - Stay of recovery of outstanding demand - Miscellaneous Application filed by the Revenue u/s 254(2A) for recall of the stay order passed - HELD THAT:- As perused the provisions of section 254(2A) of the Act. We have also deliberated on the case law relied by ld. representative of the parties. We have noted that appeal for Assessment Year 2012-13 [2018 (12) TMI 1937 - ITAT MUMBAI] has already been adjudicated by this Tribunal.Therefore, Miscellaneous petition has become infructuous and thereby dismissed.
Issue of exceeding 365 days before the Tribunal at the time of extension of the stay - As decided in M/S. PIRAMAL ENTERPRISE LTD. [2019 (3) TMI 1319 - ITAT MUMBAI] the Legislature was conscious of the fact that there are circumstances where stay has to be granted beyond six months as the facts requires in the exceptional cases. We have gone through the said order and noticed that no such plea was placed before the Tribunal at the time of hearing or from record we could not trace such arguments or plea. Hence taking into consideration all the facts and circumstances, we are of the view that the Hon'ble High Court has struck down the expression, "even if the delay in disposing of the appeal is not attributable to the assessee" as substituted by 3rd proviso to Section 254(2A) of the Act and taken a view that the Tribunal has power to extend stay even beyond 365 days and even after the substitution of 3rd proviso to Section 254(2A)
Considering the decision of Tribunal on similar Miscellaneous Application and respectfully following the same, the present Miscellaneous Application is dismissed.
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2019 (5) TMI 1930 - NATIONAL COMPANY LAW TRIBUNAL HYDERABAD BENCH
Approval of Resolution Plan - Eligibility of Resolution Professional to place the Resolution Plan before the COC for voting - eligibility of COC to vote on such plan - absence of ascertaining compliance with the mandatory provisions of the Code - HELD THAT:- It is very clear from the proceedings that Financial Creditor holding security interest over the assets of Corporate Debtor were given higher amount from out of the Resolution Fund than those who are not holding the security interest or holding security interest which is lower in value. This grouping of Financial Creditors does not amount to any discrimination. The creditors who are having valuable assets are to be given higher percentage from out of the Resolution Fund than those who are holding less value of the assets. Though, Canara Bank was allotted higher amount than the Applicant, it cannot be said there is discrimination in the allocation of share from the Resolution Fund and the same is done basing on the value of security.
There are no ground to direct Resolution Applicant again to revive the allotment basing on the percentage of the claim admitted by Resolution Professional of the amounts due to Financial Creditors.
Application dismissed.
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2019 (5) TMI 1929 - NATIONAL COMPANY LAW TRIBUNAL, CHANDIGARH
Seeking order requiring the corporate debtor to be liquidated in the manner laid down in the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, it has been submitted that the last date for submission of resolution plan was extended to 15.04.2019 and no resolution plan was received by that date. The meeting of the COC on 25.04.2019 is stated to be held before the completion of the extended CIRP. The resolution for liquidation of the corporate debtor has been passed with the consent of members of COC representing 100% of voting rights. The conditions provided for in Section 33(2) of the Code being satisfied, order of liquidation is being passed as below.
Section 34(1) of the Code inter alia provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under Section 33, the RP appointed for the CIRP shall, subject to submission of written consent by the RP to the Adjudicating Authority in specified Form, act as the Liquidator for the purposes of liquidation. In the present case, Shri Anup Kumar Singh, RP has given his consent for acting as Liquidator for the purposes of liquidation of the corporate debtor. Therefore, in view of Section 34 (1) of the Code, the RP is being appointed as the Liquidator.
The corporate debtor K.T.C Foods Pvt. Ltd. is directed to be liquidated in the manner as laid down in Chapter III of the Code - Application allowed.
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