TMI Tax Updates - e-Newsletter
October 10, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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GST:
Input Tax Credit (ITC) - Validity of inquiry letter - legality of Explanation to Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 - exclusion of 'telecommunication towers' from the meaning of the term 'Plant and Machinery'- No interference into the inquiry proceedings - However, this Court shall examine the legality and validity of Explanation to Section 17(5)(d) of the CGST Act - HC
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Income Tax:
TDS u/s 194C - payments made to C & F agents - Assessees only contend that in clear cases where separate bills have been raised by the C & F agents towards the reimbursement of freight charges, they are not liable to deduct tax at source upon payment towards such reimbursement components, since, such payment has no income element embedded in it. - The contention accepted - HC
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Income Tax:
Adhoc disallowance of the expenditure - Whether expenses were wholly and exclusively incurred for the business of the appellant? - Assessee was unable to point out any perversity in the findings of fact, which has been recorded by the AO, CIT (Appeals) as well as the Tribunal. It is pertinent to mention her that even in the substantial questions of law no perversity has been averred. - HC
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Income Tax:
Determining the rate of tax u/clauses of Section 115(A)(1)(b) - Different rates of taxes in respect of royalty and piece for technical services were provided under different agreements. Therefore, the Tribunal has rightly taken the view that for the purposes of computing tax payable on the royalty income received, it has to be taxed with reference to the provisions of the agreement. - HC
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Income Tax:
Exemption u/s 10(23C)(iiiab) - Once the returns of income have been held to be invalid, there is no return of income available for making any assessment. In the absence of any returns of income, the question of claiming or allowing exemption u/s 10(23C)(iiiab) does not arise - AT
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Income Tax:
Disallowing repairs and maintenance expense - The expenses reimbursed by the assessee have been paid through bank account and routine expenditure in nature. Therefore, none of the expenditure could be said to be capital in nature and hence, allowable expenditure u/s 37(1) - - AT
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Income Tax:
Dividend dividend u/s.2(22)(e) - transactions between the shareholder and company - Director of the company holding 50% shares taking temporary accommodation loans from company - the transactions between the assessee and TIBPL, in the given circumstances, do not constitute deemed dividend in favour of the assessee so as to fall within the ambit of section 2(22)(e) of the Act. - AT
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Income Tax:
Interest received by the assessee u/s. 28 of the Land Acquisition Act, 1984 - it is palpable that post the decision in Ghanshyam, a statutory amendment has been carried out providing that income by way of interest received on compensation or on enhanced compensation shall be chargeable to income-tax under the head “Income from other sources”. - AT
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Income Tax:
Section 271AAB of the Act, contemplates imposition of a penalty pursuant to the disclosure of income in statement recorded u/s 132(4) of the Act by the assessee. It is an admitted fact that no such statement has been recorded from the assessee. Thus, on this ground also, the levy of penalty fails. - AT
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Income Tax:
Addition u/s 68 - short-term advance receipts - The amount in dispute is a short term loan which was duly repaid by the assessee through proper banking channel to M/s Birch Vinmay Private Limited, hence, in our considered view the addition in dispute was wrongly been made in the hands of the assessee which needs to be deleted. - AT
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Customs:
Revocation of Customs Broker License - prohibition from transferring or selling his licence - The appellant has, by subletting their licence to another person in complete violation of CBLR, 2013 has created an open channel through which any contraband can be smuggled out of India with impunity - appeal dismissed - AT
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Corporate Law:
Direction to Respondent's Company to issue a share certificate - transfer of interest on the basis of will - since the will is executed outside the original territorial jurisdiction of the Madras High Court, therefore, Section 57(a) of the Indian Succession Act read with Section 213(2) of the Indian Succession Act, it is not required to grant a probate, hence even if the Probate is not granted, a person can transfer any interest on the basis of Will. - Tri
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - Failure to prove the payment of money to third person on behalf of complainant - both the trial court as well as the session judge's court have rightly rejected the defence taken up by the accused and have rightly convicted the accused for the alleged guilt. - Tri
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IBC:
CIRP proceedings - piercing of Corporate Veil - seeking invoking the Bank Guarantee furnished by the parent company - the instant application is a fit case for piercing 'Corporate Veil'. Accordingly, we came to the same view that lifting of Corporate Veil is very much needed and permitted in the instant case as the promoters/ directors of a company diversify the business in various field by creating several independent entities, call it subsidiaries, with the constitution of common directors and at some point of time if the Group gets financially stressed due to default in repayment of debt, at that juncture a right of recourse is required to be adopted. - Tri
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IBC:
Resolution Plan - Implementation of the approved Resolution Plan is underway. - The Appellant cannot be permitted to scuttle the process at this stage and that too without substantial grounds. No material irregularity in resolution process vitiating it, has been canvassed or brought to our notice, which would render the whole exercise unsustainable. - AT
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IBC:
Initiation of CIRP - Salary, retention bonus and other dues of former employees - existence of debt and dispute or not - the "Doctrine of Substance over Form" is to be applied in case of economic legislation like IBC 2016 so that its objectives to promote entrepreneurship and economic growth coupled with balancing of interest of all stake holders are achieved - Tri
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SEBI:
Interpretation of Statute - it is concluded that Section 14 and Section 238 of IBC 2016 has an overriding effect on Section 28A of SEBI Act. - SEBI is not barred from taking any action as it may deem fit, against the directors, shareholders and key management personnel of the Corporate Debtor for their fraudulent acts. - Tri
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Central Excise:
SSI Exemption - clubbing the clearances of job worker with that of the appellant - under the scheme of the Act, ipso facto the duty liability is on the job worker - the appellant is not liable to pay any central excise duty for the goods got manufactured and cleared from the job worker’s premises. - AT
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VAT:
Requirement of pre-deposit - consideration of merit of the matter while making interim order - It can be concluded that the prima facie merits of the case are an important factor to be taken into account at the stage of deciding a stay application. The first proviso of Section 76(4) of the Act gives the discretion to the Appellate Tribunal to dispense with the requirement of a pre-deposit. The provision is widely worded and does not put any fetter or constraint on the Tribunal. The prima facie view of the merits of the matter is one of the cornerstones of any application seeking dispensation of the pre-deposit. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (10) TMI 374
Detention of goods alongwith the vehicle - detention of the vehicle was on the ground that the consignment was not accompanied by a valid e-way bill - Section 129 of the GST Act - HELD THAT:- The detention cannot be said to be unjustified. Taking note of the request of the petitioner for permission to clear the goods and the vehicle on furnishing a Bank guarantee, the writ petition is disposed off with a direction to the respondents to permit the petitioner to clear the goods and the vehicle on furnishing a Bank guarantee for the amounts demanded in Ext.P9 order.
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2020 (10) TMI 373
Detention of goods - allegation that the detention was not justified since it was for reasons totally unconnected with the vehicle, and had more to do with incomplete information furnished by the consignor of the goods - HELD THAT:- The goods have been detained on account of various defects in the documents that accompanied the transportation of the goods as per the provisions of the GST Act and Rules. In that view of the matter, I do not see the detention to be unjustified. Taking note of the plea of the petitioner for an expeditious release of the vehicle that is detained, I direct that if the petitioner furnishes a bank guarantee for the tax and penalty amounts demanded in Ext.P5 notice, then the 3rd respondent shall release the goods and the vehicle to the petitioner - Petition disposed off.
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2020 (10) TMI 372
Release of detained goods alongwith the vehicle - it is the case of the petitioner that the owner of the goods is now not traceable and under the said circumstances, although proceedings under Section 130 of the GST Act have been completed against the petitioner, she must be permitted to get a release of the vehicle on furnishing a security for the redemption fine that would be imposed on the vehicle in lieu of confiscation - HELD THAT:- There are force in the contention of the learned Government Pleader that in view of an order having been passed under Section 130 of GST Act, the ownership of the vehicle now stands vested with the State Government as per the statutory mandate, and if the petitioner seeks a release of the vehicle, pending appellate proceedings that she wishes to pursue against the order passed under Section 130, she would have to pay the amount demanded above by cash and she cannot be permitted to get the release of the vehicle by furnishing a Bank Guarantee for the said amount - the writ petition is disposed off by directing that, if the petitioner pays the amount of ₹ 4,21,200/- to the respondents, then on such payment the respondent shall forthwith release the vehicle to the petitioner.
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2020 (10) TMI 371
Input Tax Credit (ITC) - Validity of inquiry letter - legality of Explanation to Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 - exclusion of 'telecommunication towers' from the meaning of the term 'Plant and Machinery'- Input Tax Credit on construction of Immovable Property. HELD THAT:- This Court is not inclined to interfere with the inquiry letter dated 29th July, 2019 as well as the proceedings initiated under the said letter. However, this Court shall examine the legality and validity of Explanation to Section 17(5)(d) of the CGST Act along with similar writ petitions, i.e. BAMBOO HOTEL AND GLOBAL CENTRE (DELHI) PVT LTD VERSUS UNION OF INDIA AND ORS [ 2019 (5) TMI 1805 - DELHI HIGH COURT] and DELHI INTERNATIONAL AIRPORT LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 696 - DELHI HIGH COURT] . It is clarified that there is no stay of the letter dated 29th July, 2019.
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Income Tax
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2020 (10) TMI 370
TDS u/s 194C - payments made to C F agents - Whether it is outright reimbursement of freight charges having no element of profit ? - whether Hon'ble Tribunal was right in law in upholding the disallowance under Section 40(a)(ia) of IT Act when said section cannot be applied in the instant case ? - HELD THAT:- Unless the paid amount has any income element in it, there will arise no liability to pay any income tax upon such amount - in such a situation, there will also arise no liability of any deduction of tax at source upon such amount. Section 190 of the IT Act is to be found in Chapter XVII of the IT Act concerning the collection and recovery of tax. Sub section (2) of Section 190 of IT Act provides that nothing in this Section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of Section 4. Section 190 of IT Act states the general rule where provisions of Chapter XVII apply. Section 194(C) of the IT Act which is a part of Chapter XVII specifically concerns payments to be made to contractors which would include C F agents. Liability to deduct or collect income tax at source is upon such income as referred to in Section 190(1) of the IT Act. The expression such income would ordinarily relate to any amount which has an income element in it and not otherwise. This is because the regime of TDS was enacted for the purpose of easy collection of income tax or to prevent the tax evasion. From bare reading of text of Section 190 and other provisions to be found in Chapter XVII, it deals with collection and recovery of tax . It is clear that the TDS regime is nothing but an alternate mode of recovery or collection of income tax. In Krupp Udhe GMBH [ 2010 (3) TMI 287 - BOMBAY HIGH COURT] the Division Bench of this Court speaking through Dr. D. Y. Chandrachud, as His Lordship then was, held that the question as to whether the reimbursement of expenses will form a part of the taxable income is not res integra in so far as this Court is concerned. Reference was then made to the decision in Siemens Aktiongesellschaff [ 2008 (11) TMI 74 - BOMBAY HIGH COURT] wherein another Division Bench of this Court agreed with the view taken by the Calcutta High Court in CIT Vs Dunlop Rubber Co. Ltd. [ 1982 (2) TMI 24 - CALCUTTA HIGH COURT] and Industrial Engineering Projects (P) Ltd., [ 1992 (7) TMI 38 - DELHI HIGH COURT] amounts by way of reimbursement expenses do not constitute income as such and liable to any income tax. Assessees only contend that in clear cases where separate bills have been raised by the C F agents towards the reimbursement of freight charges, they are not liable to deduct tax at source upon payment towards such reimbursement components, since, such payment has no income element embedded in it. According to us, the Assessees' contention deserves to be upheld in the facts and circumstances of the present case. There are decided cases which support the contention of the Assessees and reference can be usefully made to some such cases. - Decided in favour of assessee.
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2020 (10) TMI 369
Penalty u/s 271(1)(c) - unexplained credits - Tribunal reducing the penalty by holding the unexplained credits as turnover of the assessee and accordingly proportionately reducing the income and penalty - HELD THAT:- Tribunal held that once the income is reduced, the penalty would also get reduced proportionately and thereby the Tribunal restricted the penalty. If such is the view of the Tribunal, then, in our opinion, we should not disturb the same. - Decided against revenue.
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2020 (10) TMI 368
Adhoc disallowance of the expenditure - Whether expenses were wholly and exclusively incurred for the business of the appellant? - reasonability of the expense - HELD THAT:- Tribunal has notice that Assessing Officer has found that details of expenditure incurred by the assessee are not directly relatable to each heads. AO has bifurcated the expenditure claimed by the assessee under various heads and then pointed out why expenses meant for a particular head has been debited under a different head viz., other marketing expenses. However, the assessee failed to give any reply to this aspect. CIT (Appeals) has re appreciated the evidence and has observed that quantification of disallowance is on the higher side and therefore, the disallowance has been made on adhoc basis and has been restricted to ₹ 25 Lakhs. Similarly, the Tribunal has found that the assessee has not maintained log book of the vehicles exhibiting their exclusive usage therefore, it has held that CIT (Appeals) has rightly arrived at the conclusion that possibility of user other than business purposes cannot be ruled out and therefore, 10% of the disallowance out of the total expenses has been upheld. Tribunal has held that the assessee has not been able to substantiate the claim incurred for expenditure towards business by producing vouchers. Therefore, the Tribunal has upheld the order passed by the CIT (Appeals). Assessee was unable to point out any perversity in the findings of fact, which has been recorded by the AO, CIT (Appeals) as well as the Tribunal. It is pertinent to mention her that even in the substantial questions of law no perversity has been averred. The scope of interference by this court in exercise of power under Section 260A of the Act is well settled. - No substantial question of law.
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2020 (10) TMI 367
Liability to pay interest u/s 234B - interest accrue or is leviable in the case of the assessee which is a foreign company and no advance tax is liable to be paid by it as its income is liable to tax deduction at source - HELD THAT:- This substantial question of law has already been answered against the revenue by this Court in M/S. TEXAS INSTRUMENTS INCORPORATED [ 2020 (9) TMI 873 - KARNATAKA HIGH COURT] Determining the rate of tax u/clauses of Section 115(A)(1)(b) - Taxation of Income by way of Royalty or Fees for Technical Services - tax payable on royalty income received in pursuance of agreement entered into on or after 01.06.2005 and provisions of Article 12 of the Indo-US DTAA for computing the tax payable on royalty income received in pursuance of agreements entered into on or before 01.06.2005 - HELD THAT:- The contracts or agreements being source of income had been entered into on different dates and the statute recognizes such differentiation and provides for separate tax rates for each stream. Therefore, the tax on royalty income cannot be levied on an aggregate basis and taxability of royalty under sub- clauses (A), (AB), (BB) and (C) of Section 115(a)(b) are separate and distinct. The assessee therefore can compute tax at the rate beneficial to it which is in accordance of provisions of Section 90(2) of the Act, wherein the expression 'to the extent' makes it evident that provisions of the Act or Treaty, whichever is beneficial, is applicable to the assessee. Tribunal has rightly held that the date of agreement while determining the rate of tax under the aforesaid clauses of Section 115(A)(1)(b) are separate and independent. It is also pertinent to note that the explanatory note to the provisions of Finance Act, 2013, were issued by Circular No.3/2014 dated 24.01.2014. in order to correct the anomaly prevalent in Section 115A with regard to rates of taxes in case of non-resident tax payer, in respect of income by way of royalty and piece for technical services as provided under Section 115A, was increased by way of amendment from 10% to 25%. Thus, from perusal of the aforesaid explanatory notes, it is evident that different rates of taxes in respect of royalty and piece for technical services were provided under different agreements. Therefore, the Tribunal has rightly taken the view that for the purposes of computing tax payable on the royalty income received, it has to be taxed with reference to the provisions of the agreement. - Decided against revenue.
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2020 (10) TMI 365
Denial of natural justice - ex-parte order - Disallowance of deduction u/s 14A - through notice A.O called for certain records from the appellant but he did not respond - change in the jurisdiction and succeeding A.O issued two more notices under section 124 - Commissioner (Appeals) has maintained the assessment under section 14A but scaled down the expenditure under other heads - tribunal has found that the appellate authority has acted in haste and allowed the deduction without any material and remanded the matter to the primary authority for reconsideration - appellant contends that the appellant did not receive the first notice and received only the notices issued by the A.O after the change of jurisdiction hence no opportunity of being heard given - whether the appellant would be prejudiced if the matter had to be heard afresh by the A.O? HELD THAT:- Initial assessment proceedings before the AO were ex parte, for the appellant had not chosen to respondent to the statutory notices. Then, the appellant has approached the Commissioner (Appeals), who secured a remand report from the Assessing Officer. Finally, the appellate authority has confirmed the AO s disallowance under Section 14A of the IT Act but deleted the additions. On the Department s appeal, the Income Tax Appellate Tribunal has observed that the appellate authority has displayed haste in deleting the additions without the assessee even agreeing to produce the complete books of account and the supporting evidence. Then, the Tribunal has concluded that it will the interest of justice if the issue is remitted to the file of the AO. The appellant was, thus, given one more opportunity to agitate the issue before the AO and justify its contentions. We, therefore, reckon that the impugned order of the Tribunal has caused no prejudice to the appellant; nor has it suffered from any legal infirmity for us to interfere. No substantial question of law
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2020 (10) TMI 364
Exemption u/s 10(23C)(iiiab) - invalid Return in terms of sec.139(9) - assessee filed its returns of income claiming exemption u/s 11 - HELD THAT:- The provisions of sec.139(9) clearly states that, if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return. Since the defects pointed out by AO/CPC were not rectified by the assessee in both the years, the returns of income filed for these two years have been rightly held to invalid return in terms of sec.139(9) of the Act. Hence it should be held that the assessee has failed to furnish the returns of income for AY 2014-15 and 2015-16. AO can rectify the mistakes apparent from record u/s 154 of the Act. However, even if any rectification order is required to be passed u/s 154 of the Act, it is required to be shown that there is a mistake apparent from record in the original order - rectification of order cannot be carried out without giving notice of hearing to the assessee - even u/s 154 of the Act, entire order cannot be recalled. If any of the order so passed by an assessing authority is erroneous and prejudicial to the interests of revenue, then revision proceedings can be initiated u/s 263 by the Ld CIT. Hence the letters dated 24.3.2017 issued by the AO on his own directing the assessee to ignore its earlier orders is not in accordance with law. Hence the said letters are nullity in the eyes of law. Accordingly, we are of the view that the said letters cannot validate an invalid return. Processing of returns of income for both the years, after holding them as invalid, is not in accordance with the law. Hence the Ld CIT(A) was justified in holding that the AO is not correct in processing the returns of income. Accordingly, in terms of sec.139(9) of the Act, it should held that the assessee has not filed returns of income for AY 2014- 15 and 2015-16. Once the returns of income have been held to be invalid, there is no return of income available for making any assessment. In the absence of any returns of income, the question of claiming or allowing exemption u/s 10(23C)(iiiab) does not arise. Accordingly, we are of the view that the Ld CIT(A) was not justified in holding that the exemption u/s 10(23C)(iiiab) should be allowed to the assessee. - Decided against assessee.
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2020 (10) TMI 363
Disallowing repairs and maintenance expense - Whether expenses are incurred for the business, fully supported and paid by the Appellant? - HELD THAT:- The assessee has deducted due tax at source from the aforesaid payment. These facts would rebut revenue s allegations that the payments were not made by the assessee. The assessee s explanation that the invoice was inadvertently issued by the vendor in the name of group concern was to be accepted. Regarding the nature of the expenditure, the complete details of the same was placed before lower authorities and the expenditure was in the nature of designing work of certain premises from where the assessee s business was being carried on. By expanding this amount, no new asset could be said to have come into existence and therefore, the expenditure was to be treated as revenue in nature. Finally, impugned disallowance as made by Ld. AO could not be sustained in the eyes of law - Decided in favour of assessee. Deferred Revenue Expenditure - Disallowance of non-revenue expenditure - HELD THAT:- Assessee vide submissions to Ld.AO had provided complete details as well as supporting documents of the expenditure so claimed u/s 37(1). The payment has been made to Maharashtra State Electricity Distribution Co. Ltd. towards electricity bill and the same is clearly revenue in nature. The payment to APCPDCL is towards service line charges and development charges, which is also revenue in nature. The stamp duty is towards registration of lease deed in assessee s favor which is also revenue in nature. The expenses reimbursed by the assessee have been paid through bank account and routine expenditure in nature. Therefore, none of the expenditure could be said to be capital in nature and hence, allowable expenditure u/s 37(1) - The impugned disallowance so made stands deleted - Decided in favour of assessee.
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2020 (10) TMI 362
Deduction u/s 80P - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. Appeals filed by the assessee are partly allowed.
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2020 (10) TMI 361
Cash payment for purchase of shop - material retrieved from the hard disk found at the time of search in the case of AEZ group - HELD THAT:- No distinguishing feature in the facts of the present case and that of Subhash Khattar/Deepak Gupta [ 2017 (7) TMI 1091 - DELHI HIGH COURT] has been pointed out by the Revenue. Further it has also not brought on record any material to show that the decisions of the co-ordinate bench of the Tribunal in the case of Subhash Khattar/Deepak Gupta [ 2017 (7) TMI 1091 - DELHI HIGH COURT] has been set-aside/stayed or over ruled by higher judicial forum. We therefore following the order of the co-ordinate bench in the case of Deepak Gupta [ 2019 (1) TMI 1812 - ITAT DELHI] and for similar reasons hold that the Revenue was not justified in making the addition. - Appeal of assessee is allowed.
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2020 (10) TMI 360
Non filing of appeal electronically - Penalty u/s 271(1)(c) on claim for deduction under Sec.80IB(10) denied - CIT (Appeals) dismissing the appeal petition on the basis of alleged compliance default of not having filed electronically - Penalty order is bad in law - HELD THAT:- The issue herein involved is squarely covered by an order in the case of All India Federation of Tax Practitioner, Mumbai, Vs. ITO (E)-1(2), Mumbai [ 2018 (6) TMI 1171 - ITAT MUMBAI] as observing that the default on the part of the assessee in filing the appeal in paper form was merely a technical defect which could not be allowed to overshadow the cause of substantial justice. Appeal in all fairness and in the very interest of justice is restored to the file of the CIT(A). CIT(A) is directed to consider the appeal which was electronically filed by the assessee as having been filed on the date on which the same was manually filed in paper form on 21.04.2016, and dispose it off on merits by way of a speaking order. Needless to say, the CIT(A) while disposing off the appeal shall afford a reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2020 (10) TMI 359
Disallowance on account of inter-corporate deposits written off - said ICD carried an interest rate of 12% p.a and the assessee had duly offered to tax the interest income on such ICD under the head income from business - HELD THAT:- Interest income on ICD was taxed by the revenue in earlier assessment years under the head income from business . This action itself goes to prove that revenue had factually accepted the fact that ICD was advanced by the assessee in the ordinary course of its business. When such ICD together with its interest portion thereof had been written off by the assessee due to its non-recovery and due to the fact of borrower expressing its inability to pay and finally arriving at one time settlement thereof, any consequential write off of the remaining figure in ICD would obviously become only business loss incurred by the assessee as the advancing of money there of had been done in the ordinary course of its business. As correctly followed CIT vs. Pudumjee Pulp Paper Mill Ltd. [2015 (8) TMI 719 - BOMBAY HIGH COURT] wherein under similar facts and circumstances, the Hon ble Bombay High Court had allowed the claim of write off of ICD as the business loss. No infirmity in the action of the ld. CIT(A) granting relief to the assessee with regard to allowability of write off of ICD amounts as business loss. - Decided against revenue.
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2020 (10) TMI 358
Disallowance u/s.14(A) - suomotu disallowance done by the assessee itself - HELD THAT:- CIT(A) has referred in the case of Joint Investment P. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] correctly for the proposition that disallowance u/s. 14A cannot exceed the exempt income. In this view of the matter, as held that the disallowance in this case will not exceed the suomotu disallowance done by the assessee which was more than the exempt income. - Decided against revenue.
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2020 (10) TMI 357
Dividend dividend u/s.2(22)(e) - transactions between the shareholder and company - Director of the company holding 50% shares taking temporary accommodation loans from company - HELD THAT:- Regular course of transactions between the assessee and TIBPL which was for the mutual benefit of both the assessee and TIBPL, but mainly with an advantage to TIBPL. The Hon ble Calcutta High court in CIT Vs. Gayatri Chakraborty [2018 (6) TMI 1235 - CALCUTTA HIGH COURT] has held that where the transactions between the shareholder and company create mutual benefits and obligations, then the provisions of treating any sum received by the shareholder does not constitute deemed dividend. In another unreported judgment in CIT Vs. Schutz Dishman Biotech Pvt. Ltd. [ 2016 (1) TMI 84 - GUJARAT HIGH COURT] held that accommodation adjustment entries do not fall within the realm of deemed dividend u/s.2(22)(e). It is clear that the transactions between the assessee and TIBPL, in the given circumstances, do not constitute deemed dividend in favour of the assessee so as to fall within the ambit of section 2(22)(e) of the Act. We, therefore, overturn the impugned order on this score and order to delete the addition. - Decided in favour of assessee.
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2020 (10) TMI 356
Interest received by the assessee u/s. 28 of the Land Acquisition Act, 1984 - Whether treated as interest income separately chargeable to tax instead of a part and parcel of the sale consideration? - assessee treated such amount as part of the enhanced compensation of land and claimed the same as exempt from tax on the ground that the land itself was agricultural - HELD THAT:- Hon ble Supreme Court in CIT Vs. Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] held that interest u/s.28 under The Land Acquisition Act, is to be taxed as part of consideration on receipt basis. This judgment was delivered on 16-07-2009. The Finance (No.2) Act, 2009 w.e.f. 01-04-2010 inserted clause (viii) to section 56(2) providing that: income by way of interest received on compensation or on enhanced compensation referred to in sub-section (1) of section 145B shall be chargeable to income-tax under the head Income from other sources . Section 145B(1) provides that: Notwithstanding anything to the contrary contained in section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received . Thus it is palpable that post the decision in Ghanshyam (supra), a statutory amendment has been carried out providing that income by way of interest received on compensation or on enhanced compensation shall be chargeable to income-tax under the head Income from other sources . Interest u/s.28 under the LAA is chargeable to tax, is intact and has not been disturbed in any manner by the Hon ble Supreme Court in the case of Hari Singh and others [ 2017 (11) TMI 923 - SUPREME COURT] - Respectfully following judgment of Hon ble Punjab Haryana High Court in Manjeet Singh [ 2015 (12) TMI 1123 - PUNJAB HARYANA HIGH COURT] along with the statutory amendment carried out to section 56(2) inserting clause (viii) w.e.f. 01-04-2010, it is overt that the ld. CIT(A) has taken an unexceptionable view in the matter pertaining to the A.Y. 2013-14. We, therefore, uphold the same. This ground is not allowed. Addition as long term capital gain on acquisition of land - HELD THAT:- There is complete contrast in the version of the AO and the assessee. Whereas the case of the AO is that the land acquired was situated at Khadgaon, the assessee is contending that it was at Gut No. 11 Vasangaon. In support of such a claim, the assessee has filed certain additional evidence, which has not passed through the eyes either of the AO or the CIT(A). In our considered opinion, it would in the interest of justice, if the impugned order is set aside on this score and the matter is restored to the file of AO for determining as to whether the land acquired was at Khadgaon or Gut No. 11 at Vasangaon in the light of the entire material and thereafter to decide whether it was an agricultural land or a capital asset - Decided in favour of assesse for statistical purposes.
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2020 (10) TMI 355
Validity of notice issued u/s 148 in the name of the deceased assessee - AO has shifted the blame on the Legal Heir of the assessee regarding the information of death of the assessee instead of conducting the enquiry to find out the fact - HELD THAT:- Since it is not a case of pending assessment proceedings but the AO proposed to assess the income u/s 147/148 then it is incumbent upon the AO to issue the notice u/s 148 to the right person. The subsequent participation of the Legal Heir in the assessment proceedings would not render the proceedings valid when the initiation of the proceedings itself are invalid for want of a valid notice under section 148. Tribunal after considering the decision in case of Vipin Walia vs. ITO [2016 (2) TMI 524 - DELHI HIGH COURT] as in case of Alamelu Veerappan vs. ITO [ 2018 (6) TMI 760 - MADRAS HIGH COURT] has held that notice issued under section 148 in the name of the deceased assessee is a nullity in the eyes of law. Consequently, the proceedings initiated under section 147/148 are vitiated and liable to be quashed. Accordingly in the facts and circumstances of the case and following the decisions as discussed above, we hold that the notice issued u/s 148 in the name of the deceased assessee is invalid. The same is liable to be quashed. Since the initiation of reassessment proceedings itself are held to be invalid, the reassessment order passed by the AO would not survive and liable to be set aside. - Decided in favour of assessee.
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2020 (10) TMI 354
Deduction u/s 54 - AO has treated the amounts received by the assessee as business receipts, solely for the reason that the amounts were received in instalments - decision of CIT(A) in holding that the amounts received by the assessee is assessable as long term capital gains - HELD THAT:- The undisputed facts remain that the assessee is the owner of land and he has transferred the same to the developer, M/s Shriram Properties Ltd under a Joint Development Agreement. It is a fact that the assessee has not carried on any venture or business activity by so transferring the land. On the contrary, it is M/s Shriram Properties Ltd, which is carrying on business activity. The role of the assessee is restricted to transferring the land and receiving the consideration. There is no dispute with regard to the fact that the land was held by the assessee as capital asset only. Hence the transfer of land would give rise to capital gains only as per the provisions of the Act. As happened that the consideration for transfer of land was so fixed that the assessee would be receiving 2.64% of the sale consideration of flats that are going to be constructed. Hence the assessee would be receiving amounts as and when the flats are sold. As rightly observed by Ld CIT(A), the receipt of consideration over a period on sale of a capital asset does not change the true nature of transactions from capital gains to business. Irrespective of timing of receipt of sale consideration, the transfer of a capital asset would give rise to capital gains only. CIT(A) was justified in holding that the amounts received by the assessee is assessable as long term capital gains. Amounts received by the assessee is assessable as long term capital gains. We also notice that the there was no occasion for the AO to examine the claim for deduction u/s 54 of the Act, since he had assessed the receipts as business income. Accordingly, we find merit in the contentions of the Ld D.R. Accordingly, we restore the issue of claim for deduction u/s 54 - Appeals of the revenue are treated as partly allowed for statistical purposes.
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2020 (10) TMI 353
Penalty u/s 271AAB - defective notice - non specification of charge - entries relating to commodity trading profit was not maintained in the regular books of accounts of the assessee AND from the document seized as seen only net earnings were recorded and that there were several such transactions in the month in commodity trading made in cash - HELD THAT:- As relying on SHEVETA CONSTRUCTION CO. PVT. LTD. [ 2016 (12) TMI 1603 - RAJASTHAN HIGH COURT] penalty in question is bad in law as the show-cause notice issued by the Assessing Officer does not specify the charge/s against the assessee for levy of penalty, as required by law. Thus, on this ground, the penalty is quashed. Section 271AAB of the Act, contemplates imposition of a penalty pursuant to the disclosure of income in statement recorded u/s 132(4) of the Act by the assessee. It is an admitted fact that no such statement has been recorded from the assessee. Thus, on this ground also, the levy of penalty fails. Nowhere in the assessment order it is stated that undisclosed income has been assessed. The assessment was made u/s 143(3) of the Act and the returned income was accepted - we quash the penalty levied u/s 271AAB of the Act and allow this appeal of the assessee.
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2020 (10) TMI 352
Addition on account of low household expenses - HELD THAT:- AO has neither pointed out any and cogent and convincing reason nor pointed out any evidence on record to justify his action. In the remand report AO has justified the addition in question only on the ground that his predecessor has made the said addition. As pointed out in the case of Sh. Dinesh Kumar Kaushal [ 2016 (3) TMI 234 - ITAT DELHI] has deleted the addition made on account of low household expenses in the similar set of facts by following the ratio laid down in the case of C. Velukuty [ 1965 (12) TMI 32 - SUPREME COURT] CIT(A) has wrongly affirmed the action of AO in making addition purely on ad hoc basis without assigning any cogent reason and referring any evidence. Hence, respectfully following the decision of the Delhi Bench of the Tribunal discussed above, we set aside the findings of the Ld. CIT(A) and allow this ground of appeal of the assessee and direct the AO to delete the addition. Addition of cash deposits in the bank account - Assessee has contended before the Ld. CIT(A) that during the year relevant to the assessment year under consideration, the assessee was a partner in M/s S.D. Marketing Co. having 60% share, besides proprietor of two concerns - HELD THAT:- Assessee withdrew money from the accounts of the said concerns from time to time in connection with the business of the said concerns - authorities below have not examined this aspect in order to verify the contention of the assessee - authorities below have not controverted the plea of the assessee that the assessee had personal cash balance of ₹ 1,06,758/- as on 01- 04-2012. Assessee has discharged the onus of explaining the credit entries in question, however, the authorities below have rejected the explanation without assigning any cogent reason or rebutting the contention of the assessee. The facts of the case and the evidence on record suggest that the CIT(A) has sustained the addition without considering the explanation given by the assessee - action of the Ld. CIT(A) is not in accordance with the settled principles of law - we direct the AO to delete the addition. - Decided in favour of assessee.
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2020 (10) TMI 351
Addition u/s 68 - short-term advance receipts - HELD THAT:- We are of the view that assessee company has received a short-term advance from M/s Birch Vinimay Pvt Ltd. and repaid the same amount vide cheque in Account UCO Bank by the assessee to the aforesaid said company and the same has been entered in the books of accounts of the assessee. The Leger account of M/s Birch Vinmay Private Limited also establish the same. Therefore, we are of the view that since the assessee has repaid the advance through proper banking channel and M/s Birch Vinmay Private Limited has shown the same in its Ledger Account, therefore, no addition can be made in the hands of the assessee u/s. 68 hence, the same deserve to be deleted. The amount in dispute is a short term loan which was duly repaid by the assessee through proper banking channel to M/s Birch Vinmay Private Limited, hence, in our considered view the addition in dispute was wrongly been made in the hands of the assessee which needs to be deleted. Therefore, we delete the addition in dispute. - Decided in favour of assessee.
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2020 (10) TMI 350
Validity of reopening of assessment u/s 147 - non issuance and service of a valid notice under section 148 and impugned assessment had been completed in the name of a non-existent entity - scheme of amalgamation undertaken - Jurisdiction of AO issuing notice - HELD THAT:- It is a settled law that upon a scheme of amalgamation being sanctioned, the amalgamating Company ceased to exist in the eyes of law it cannot be regarded as a person in terms of Section 2(31) of the Act and consequently no assessment proceeding can be initiated or an assessment order can be passed. See MARUTI SUZUKI INDIA LIMITED [ 2019 (7) TMI 1449 - SUPREME COURT] wherein held that the issuance of jurisdiction notice and assessment thereafter passed in the name of non-existing company i.e. amalgamating Company having ceased to exist as a result of approved scheme of amalgamation is a substantive illegality and not a procedural violation of nature adverted to in S. 292B and hence being without jurisdiction. As the notice u/s 148 was issued by the AO at Hyderabad. The reasons for reopening were also recorded by AO at Hyderabad. The reassessment order was framed by AO at Delhi. The AO at Delhi had followed the reasons recorded by the AO, Hyderabad meaning thereby that he proceeded in framing the assessment on the basis of borrowed satisfaction of the AO, Hyderabad. In such a situation, we are of the view that the AO at Delhi had not validity assumed the jurisdiction to initiate the reassessment proceedings as he had merely followed the reasons recorded by AO, Hyderabad who had no jurisdiction over the Assessee. Reassessment proceedings initiated against the Assessee needs to be quashed and we accordingly hold so. Thus the Grounds of Assessee are allowed.
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2020 (10) TMI 349
Assessment u/s 153A - Validity of additions made within the scope of assessment framed u/s 153A/143(3) - whether any incriminating material found during the course of search? - HELD THAT:- There are majorly two kinds disallowances/additions; firstly, brand launch expenses including the advertisement/publicity and sales promotion and secondly, the disallowance of expense u/s 40(a)(i) on account of various discounts and incentives. Both these additions admittedly are not based on any seized document or material and neither there is any whisper in the impugned orders. Now it is a well established jurisprudence that in the case of unabated assessment which had attained finality on the date of search, no addition can be made unless any incriminating material or evidence has been found during search qua that addition and for that particular assessment year. Admittedly, no such incriminating material or evidence has been found on such disallowance/addition during the course of search and, therefore, following the ratio laid down in CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] Pr. CIT Vs. Meeta Gutgutia (2018) [ 2017 (5) TMI 1224 - DELHI HIGH COURT] the additions are deleted. - Decided in favour of assessee.
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2020 (10) TMI 348
Revision u/s 263 - assessee trust is registered u/s 12A declaring income at Nil after availing exemption u/s 11 - AO has not examined this aspect and did not bring to tax the surplus declared by the assessee - HELD THAT:- We have gone though the order passed by the AO u/s 143(3) of the Act. We have noticed that the said order is cryptic order without any discussion. It was also not shown to us by the assessee that the AO did examine the taxability or otherwise of the surplus shown by the assessee in its income expenditure account. Since the AO has not examined the issue at all in the asst. order, the impugned asst. order shall be rendered erroneous and prejudicial to the interest of revenue as per the decision rendered by the Hon ble Supreme Court in the case of Malabar Industrial Company [2000 (2) TMI 10 - SUPREME COURT] Accordingly we did not find any infirmity in the order passed by ld CIT u/s 263 - Decided against assessee.
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Customs
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2020 (10) TMI 346
Re-export of goods - Clove - petitioner submits that petitioner would comply with the condition imposed in the aforesaid order, namely, payment of redemption fine - HELD THAT:- No further order is required in the present proceeding save and except to close the same. Petition disposed off.
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2020 (10) TMI 345
Condonation of delay of about 211 to 228 days in filing appeal - sufficient cause shown for the delay - HELD THAT:- The delay is apparently attributable to the incident of theft which occurred in the first week of February, 2019 wherein the Supervisor Shri Mahipal was also involved, and he was the key person who has received the orders on behalf of the appellant company. Further, due to this incident there was disturbance in the normal functioning of the office of the appellant and from 02.02.2019 Shri Mahipal suddenly left the job without any notice period and without informing any responsible person regarding the receipt of impugned orders and appeals to be filed. Further, it is evident from the record that appellant has not slept over the case. After hearing before the Commissioner (Appeals), they have been making enquiries from time to time regarding status of their appeals, particularly vide letters dated 15.11.2018 and 20.05.2019. Further, it is evident from the record that the appellant traced the impugned orders on 21.07.2019. There is reasonable cause for the delay in preferring these appeals which have been properly explained - COD application allowed.
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2020 (10) TMI 344
Condonation of delay in filing appeal - Revocation of Customs broker License - forfeiture of security deposit - HELD THAT:- In the impugned order that the Customs Broker licence has been revoked leading to loss of livelihood of the appellant. Further, it has been explained that there is no deliberate delay or latches on the part of the appellant and the delay was caused due to mix-up of the documents of this appellant with the files of other clients in the office of the Counsel. It is just and proper to condone the delay, in the interest of justice - Application allowed.
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2020 (10) TMI 343
Condonation of delay in filing appeal - section 129A(3) of the Customs Act, 1962 - HELD THAT:- In the present case a review order dated August 7, 2019 was passed by a Committee of Chief Commissioner of Customs in exercise of powers conferred under section 129D (1) of the Act. The provisions of section 129A of the Act shall not apply in the present case and it is the provisions of section 129D dealing that the powers of the Principal Commissioner of Customs to pass certain orders that will be applicable - the review order was passed by a Committee of Chief Commissioners of Customs on August 7, 2019 and the appeal was filed before the Tribunal on August 19, 2019. It was within a period of one month, even if the date of communication of the order of the Committee is not taken into consideration. The appeal is, therefore, within a time. COD application dismissed.
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2020 (10) TMI 342
Revocation of Customs Broker License - prohibition from transferring or selling his licence - smuggling - red sanders - Regulation 11 of CBLR, 2013 - HELD THAT:- It is not in dispute that there was an attempt to smuggle Red Sanders in the impugned consignment and that shipping bill in respect of these consignments was filed in the name of the appellant. During investigation, the appellant had no documents pertaining to the export in their possession. In fact, in the first statement given by Shri Somnath Sarkar, partner of the appellant firm, he said that he allowed Shri Sudhir Kr. Jha of M/s.U.S. Clearing Agency to handle export and import work using their licence and therefore all original documents are lying with them - In this case since the ARE-1 itself was fake as admitted by Shri Sudhir Kr. Jha. Evidently, the container was stuffed with Red Sanders and fake documents were prepared in an attempt to smuggle the contraband out. But for the intelligence and investigation by DRI, this consignment would have left the country. There are no force in the arguments of the appellant that Shri Sudhir Kr. Jha was their own employee when all facts of the case show otherwise. Evidently, the appellant has transferred his licence or sublet it to allow unlicensed Shri Sudhir Kr. Jha and his firm M/s.U.S. Clearing Agency to clear exports and imports. Not only with respect to this consignment, but the appellant also had no records of the previous consignments exported in the name of the same exporter where the shipping bills were filed indicating the appellant as the Customs Broker. The totality of these circumstances would show that the appellant has indeed sublet his licence to Shri Sudhir Kr. Jha of M/s.U.S. Clearing Agency. In terms of Regulation 11(b) of CBLR, 2013, the appellant has to transact business at the Customs station whether directly or through an approved employee. In this case neither appellant had transacted the business directly nor through their employees, but had sublet their licence to another person. Therefore Regulation 11(b) has been violated - In this case we do not find that Shri Sudhir Kr. Jha was the employee of the appellant at all. If he was an employee he should have been paid a salary by the appellant not the other way round. Recorded statements would show that Shri Jha was, in fact, paying ₹ 8,000/- per month to the appellant. Therefore, we do not think that any employee of the appellant was involved in the present case but only a person to whom the appellant had sublet his licence. For this reason we do not find any violation of Regulation 17(9). The appellant has, by subletting their licence to another person in complete violation of CBLR, 2013 has created an open channel through which any contraband can be smuggled out of India with impunity. Since export consignments, especially if the documents show that the container was sealed by the Central Excise Officer, are not checked by the Customs officers, by creating fake ARE-1s shown to have been signed by the Central Excise Officers, an open channel for smuggling has been created by the appellant by sub-letting their licence. Appeal dismissed.
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2020 (10) TMI 341
Levy of penalty - Smuggling - gold bars bearing foreign origin - Reliability of statements - retraction of statements or not - HELD THAT:- In the case of Shri Nirmalendu Paul, the circumstantial evidence produced by the Department shows that he was caught with the seized gold bars. In his statement under Section 108 of Customs Act, 1962 given on 14.06.2016, and subsequently on 22.08.2016 during investigation, he has confessed that he was carrying the seized gold in his person and that the actual owner was Shri Debraj Paul (Appellant No. 2). He never retracted his statements during the investigation stage. He has also given the mobile number of Shri Debraj Paul and Calls Details Record (CDR) in respect of the mobile numbers given by Shri Nirmalendu Paul showed that users of these mobile numbers were known to each other. Shri Debraj Paul in his voluntary statements denied any link to Shri Nirmalendu Paul and also refused to recognize him - Shri Debraj Paul could not explain as to why Shri Nirmalendu Paul took his name immediately after interception and in the voluntary statements during investigation. He has also stated that he does not have any other business except the grocery shop. But his son Shri Debasish Paul stated that Shri Debraj Paul used to do export import business also and has a valid IEC number. It is found that only after issuance of the Show Cause Notice Shri Nirmalendu Paul, appellant No. 1. changed his version which appears to be an afterthought. During the personal hearing his Advocate claimed that the seized gold were actually recovered from a bag kept under the seat of the bus which was being occupied by Shri Nirmalendu Paul. His advocate also sought for cross examination of the independent witnesses present of the time of the seizure and that his statements were taken under threat and duress. It is found the appellant no. 1 had never altered his statements and until the end of the investigation he maintained that the gold bars were acquired by him on behalf of the appellant no. 2. The confiscation of the seized goods and imposition of personal penalties are justified - quantum of penalty reduced - Appeal allowed in part.
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Corporate Laws
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2020 (10) TMI 340
Validity of action of the 3rd respondent-the Registrar of Companies in ordering inspection through the impugned notice - inspection of books and documents of the Company by an Inspector - HELD THAT:- In the instant case, the complaint is lodged by a person (4th respondent) who has been a director of the Company alleging oppression and mismanagement of the affairs of the Company besides questioning his removal as director of the Company unceremoniously, not noticing him of the annual general body meetings for three consecutive years, which according to the 2nd petitioner itself is made a ground for removal from the post of director of the Company, which the 4th respondent refutes and states that there was no annual general body conducted at all and the question of absenting himself on such occasions does not arise, are all matters to be examined by the respondent-authorities being statutory functionaries under the 2013 Act. Whether there exists grounds in ordering inspection and the authorities are prima facie satisfied that there exists grounds for such an inspection? - HELD THAT:- It is to be seen that recording satisfaction to take action means to form an opinion which again is traceable to the nature of allegations against the person/Company or both. In this case respondents on even number of occasions received complaints from the 4th respondent alleging mis-management, oppression and fraudulent acts on the part of the 2nd petitioner, who has been the director of the Company, which itself are to be construed as the basis for forming opinion to record satisfaction for ordering inspection under Section 206 of the 2013 Act. Non recording of reasons for satisfaction in the order itself or if not manifestly appear from the order, is not fatal and the impugned order cannot be invalidated on that ground alone when the allegations are serious in nature touching upon the very functioning of the Company that too by a share holder group of 50% of the Company, now as per the orders of the NCLT, subject to orders the Appellate Tribunal. Admittedly, apart from the ROC, the Central Government (Ministry of Corporate Affairs) has the authority to direct the Registrar or an inspector appointed for the purpose, to initiate an inquiry into the affairs of the Company under Section 206(4) of the 2013 Act. The Central Government has the power to authorise any statutory authority to carry out the inspection of books of account of a company or class of companies by an order, general or special, under Section 206(5). In a petition for prevention of oppression and mis-management and where there is a prayer to investigate into the affairs of the Company, though sometimes it is called a motivated complaint, if there are serious allegations made in it, there is no reason why inspection, inquiry be not ordered against such a Company. Section 206 of the 2013 Act corresponds to Sections 209A and 234 of the repealed Companies Act, 1956. Section 206 of the 2013 Act is a combination of Sections 209A and 234 of the Act 1956. The scope of sub-Sections (1) and (3) of Section 206 of the 2013 Act read together provides enlarged powers to the Registrar as compared to the provisions of the 1956 Act. The Central Government may pass order of inspection either by the Registrar or an Inspector or any statutory authority, appointed for this purpose under Section 206 of the 2013 Act - In the present case after initiation of action under Section 206, next step under Section 207 has already been undertaken which is subject matter in WP No. 12296 of 2019 and, therefore, cause in the writ petition, WP No. 10201 of 2017 which challenged the issuance of notice under Section 206 does not survive and almost has become infructuous. However, it is for the Central Government to take further steps in the matter under Section 208 after considering the inspection report submitted under Section 207. But the issue has not come to that stage as it is for the Central Government, on receipt of report of inspection, for the best reasons, to order investigation or not, as such the 2nd writ petition, WP No. 12296 of 2019 is also premature. Petition dismissed.
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2020 (10) TMI 339
Reduction of equity share capital - repayment of the fair value of the shares to the small equity shareholders - section 66 read with section 52 of the Companies Act, 2013 - HELD THAT:- After the first hearing of the petition further clarifications were sought by this Tribunal vide order dated July 16, 2020. The further affidavit dated August 4, 2020 provided the detailed working of the valuation report as well as other clarifications sought. Having perused the petition and more particularly the reasons given in support of the proposed reduction, in our view there is no reason not to confirm the proposed action of the petitioner to reduce its capital. The said proposal does not prejudicially affect anyone. Accordingly the resolution dated January 28, 2020 is hereby confirmed. It has been noticed by this Tribunal that a caveat was filed on behalf of some shareholder/s. The petitioner has confirmed the supply of copy of the application with all its annexures in the month of March. However, no further submissions have been forwarded by the said party even after the lapse of the prescribed period of 90 days for filing the objections. Reduction of share capital allowed - application approved.
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2020 (10) TMI 338
Approval of composite scheme of arrangement - section 230-232 of the Companies Act - HELD THAT:- Directions issued for convening of various meetings - directions issued for service of notices - scheme approved - application allowed.
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2020 (10) TMI 337
Approval of Resolution Plan - Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The parameters for approval of Resolution Plan are set out in Sections 30(2) and 31 of the IBC, 2016. The Resolution Plan under consideration has met with mandatory compliances. The Resolution Plan is hereby approved which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including the Resolution Applicants - While approving the Resolution Plan, as mentioned above, it is clarified that the Resolution Applicants shall pursuant to the Resolution Plan approved under Section 31(1) of the I B Code, 2016, obtain all the necessary approval as may be required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan by this authority or within such period as provided for in such law. Order of Moratorium shall cease to have effect - Resolution Plan approved.
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2020 (10) TMI 336
Sanction the scheme of amalgamation - sections 230 to 232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- It appears that the scheme will result in economies of scale, reduction in overheads, administrative, managerial and other expenditure and increase in operational rationalization, organizational efficiency, and optimal utilization of various resources, etc. On a consideration of the facts of the case as mentioned in the preceding paragraphs, which are not elaborated here again to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the scheme of amalgamation, as approved by the boards of both the transferor and transferee companies, can be sanctioned. The scheme of amalgamation, as contained in the present petition, is hereby sanctioned and the appointed date shall be April 1, 2018 - application allowed.
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2020 (10) TMI 335
Direction to Respondent's Company to issue a share certificate - transfer of interest on the basis of will - Whether a person can transfer any interest on the basis of Will or not? - HELD THAT:- Section 213(1) of Indian Succession Act says that no right as executor or legatee can be established in any court of justice unless a Court of competent jurisdiction in India has granted probate of the Will under which the right is claimed, but sub-section 2 of the Section 213 says that this section is not applicable in case of a Will made by the Mohammadans and shall applicable only in the case of Will made by Hindu, Buddhist, Sikh or Jain, where such Wills are of the class specified in Clause (a) and (b) or Section 57 of Indian Succession Act. Territorial Jurisdiction - HELD THAT:- Decision of the Hon'ble Madras High Court upon which the Learned Counsel appearing for the Petitioner placed reliance is considered, and it is found that Hon'ble Madras High Court in a case P. Ranganathan and Others Vs. Sai Jagannathan and Others [ 1995 (8) TMI 339 - MADRAS HIGH COURT ] considered the territorial jurisdiction of Saidapet and held that the property situated in Saidapet is outside the original territorial jurisdiction of the Madras High Court - in the light of that decision when we shall consider the case in hand then we find that here in the case in hand also the property is situated in Saidapet, which according to the decision of the Hon'ble Madras High Court is outside the original territorial jurisdiction of the Madras High Court. Therefore, a combined reading of Sections 213 and 57 of the Act would show that where the parties to the Will are Hindus or the properties in dispute are not in territories falling u/s 57(a) and (b), Sub-section (2) of Section 213 of the Act applies and Sub-section (1) Section 213 of Indian Succession Act has no application. As a consequence, a Probate will not be required to be obtained in respect of a Will made outside those territories - Section 213(1) of the Indian Succession Act is not applicable, it is not necessary to grant a probate of the Will. Thus, since the will is executed outside the original territorial jurisdiction of the Madras High Court, therefore, Section 57(a) of the Indian Succession Act read with Section 213(2) of the Indian Succession Act, it is not required to grant a probate, hence even if the Probate is not granted, a person can transfer any interest on the basis of Will. Hence, the question is decided in affirmative - main case is listed for final hearing on 03.07.2020.
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2020 (10) TMI 334
Rectification of mistake - applicant submit that upon reading of the entire decision dated 15.03.2017 r.w. order dated 26.04.2017 it can be seen that the name of the Respondent No. 3 in the order has been removed due to some inadvertence and such being a clerical error arising from accidental slip, needs recertification - HELD THAT:- Assuming there is some typographical error or accidental slip in the order which could not been brought to the notice of the Hon'ble NCLAT and Hon'ble Supreme Court. Then, even in the interest of justice, it cannot be done by us without having express permission/NOC from the appellate forum/s. Otherwise, in our humble view, it may tantamount to cause material alteration in the order which may change the purport of the order in appeal as passed by the Hon'ble Supreme Court and Hon'ble NCLAT. Hence, it is now no left open to this Court. Application not maintainable and is liable to be rejected.
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2020 (10) TMI 333
Prayer to Tribunal to dispose off Section 8 application - primordial grievance of the Appellants is that besides the Appellants having been aggrieved against the Impugned Order dated 14.02.2020, passed by the National Company Law Tribunal, New Delhi Bench III, the Tribunal had not disposed of the Section 8 application pending on its file and instead passed the Impugned Order - HELD THAT:- On a careful perusal of the Judgment passed by the Hon'ble Supreme Court in Civil Appeal No. 9400/19 dated 09.01.2020 [1779165] this Tribunal comes to resultant conclusion that the said Judgment of the Hon'ble Supreme Court is binding under Article 141 of the Constitution of India. Furthermore, the CA No. 422 of 2019 pending on the file of National Company Law Tribunal, New Delhi Bench Court No. III is directed by the Appellate Tribunal to be taken up by the National Company Law Tribunal, New Delhi Bench, Court No. III on a day to day basis from 17.03.2020 without granting adjournments, and to dispose of the same within one week thereafter and to report compliance to this Tribunal. It is open to the respective parties to raise all factual and legal issues before the NCLT, New Delhi Bench III in CA No. 422 of 2019 and the said Adjudicating Authority shall take note of the same and to pass a reasoned order on merits, in accordance with Law. The Registry is directed to list the matter on 31st March, 2020.
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Securities / SEBI
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2020 (10) TMI 332
Interpretation of Statute - Whether Section 14 and 238 of IBC 2016 have an overriding effect on the provision of Section 28 of SEBI Act? - HELD THAT:- IBC which is a complete code in itself was enacted in the year 2016 and the law makers after considering the various acts prevailing at that time have framed the IBC to have a faster resolution process at par with developed countries with the primary objective of maximisation of value of assets to all stake holders. The preamble of IBC clearly mentions that the objective of the Code is maximisation of value of assets, to promote entrepreneurship, availability of credit and balance the interest of all stake holders in a time bound manner, whereas the primary object of SEBI is to protect the interest of the investors in securities market and to promote the development to regulate the securities and for matters connected therewith - it is evident that IBC is clearly a time bound action with a wider remit, whereas SEBI was given a broad mandate to protect the interest of investors and the IBC which had brought into force after considering various acts prevailing at that point of time must have also been considered SEBI Act and its implication in the corporate debtor and its operations. Therefore Section 14(1) in IBC which came into force after the enactment of IBC 2016 has precedence over Section 28A of SEBI Act. It is pertinent to go through the judgment of the Hon'ble Supreme Court in Innoventive Industries. Vs. ICICI Bank and others [ 2017 (9) TMI 58 - SUPREME COURT ] where Hon'ble Supreme Court shows the primacy of IBC over other Acts. Thus, the issue framed in the instant application got an overwhelming affirmative answer that Sections 14 and 238 of IBC has an overriding impact on Section 28A of SEBI Act when an application is admitted under CIRP under Section 7, 9 or 10 of IBC - As both the Central Acts are having similar objectives, instead of clinging to over the supremacy of the Act the Recovery Officer appointed by the SEBI under Section 28A may cooperate with the Resolution Professional in protecting the interests of the investors as well as finding a quicker resolution in the instant application. SEBI is suggested to direct their Recovery Officer to cooperate with the Resolution Professional and if required be a part of the CoC as an observer for a quicker resolution and maximisation of the value of the assets of the corporate debtor. Thus, it is concluded that Section 14 and Section 238 of IBC 2016 has an overriding effect on Section 28A of SEBI Act. As such there is no need to modify our earlier order dated 18.9.2019 - SEBI is not barred from taking any action as it may deem fit, against the directors, shareholders and key management personnel of the Corporate Debtor for their fraudulent acts. Application dismissed.
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Insolvency & Bankruptcy
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2020 (10) TMI 347
CIRP proceedings - piercing of Corporate Veil - seeking invoking the Bank Guarantee furnished by the parent company - HELD THAT:- The corporate veil between the subsidiaries and holding company are to be lifted depending on facts of each case and no straight formula can be defined. As held in various judgments, the corporate veil can be lifted for unlimited reasons and it is not only limited to the extent of the cases of fraud, impropriator. Each case needs to be tested with the unique facts of arrangement applicable to it. In the recent case of ArcelorMittal India, [ 2018 (10) TMI 312 - SUPREME COURT ] Hon'ble Apex Court has held that there is a limited principle of English Law which applies and the Court may pierce the corporate veil for the purpose, and only for the purpose of depriving company or its controller of the advantage that they would otherwise have obtained by company's separate legal personality - It is also held in the said Judgment that where a statute itself lifts the corporate veil, or where protection of public interest is of paramount importance, or where a company has been formed to evade obligations imposed by the law, the court will disregard the corporate veil. Further, this principle is applied even to group companies, so that one is able to look at the economic entity of the group as a whole. In Hindustan Construction Company Limited and Ors. Vs. Union of India (UOI) and Ors. [ 2019 (12) TMI 5 - SUPREME COURT ], where the Hon'ble Supreme Court have referred to their judgment in Mobilox Innovations Pvt Ltd. v. Kirusa Software Pvt Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] and stated that Section 5(6) of the Insolvency Code, which defines 'disputes', read with Section 8(2) of the Insolvency Code, would make it clear that there is no bar to applying an Order Vlll-A of the Code of Civil Procedure type procedure to proceedings under the Insolvency Code, so that when his client's sub- contractor triggers the Insolvency Code against his client, his client in-turn should be able to make its principal employer a party to such proceedings, so that the subcontractor may then recover these amounts from the principal employer directly, thereby absolving his client from the clutches of the Insolvency Code. Thus, it can be concluded that the instant application is a fit case for piercing 'Corporate Veil'. Accordingly, we came to the same view that lifting of Corporate Veil is very much needed and permitted in the instant case as the promoters/ directors of a company diversify the business in various field by creating several independent entities, call it subsidiaries, with the constitution of common directors and at some point of time if the Group gets financially stressed due to default in repayment of debt, at that juncture a right of recourse is required to be adopted. That is why, the right recourse shall be to examine the necessity of 'Consolidation' as there is a clear case of principal-agent relationship. The assets and properties, including any claim, interest therein, of Albanna Engineering LLC (Dubai) held through M/s. Albanna Engineering (India) Private Limited will have to be said to be the property of the Corporate Debtor, for the purpose of the present CIRP. Further, the bank guarantee of parent company for completing the work for BPCL is done by M/s. Albanna Engineering (India) Private Limited (sub-contractors), wherein the applicants, i.e., Sanghvi Movers Limited, MNB Nair, Kerala Metal Distributors and Brothers Engineering are the service providers and material suppliers for engineering projects for BPCL. Therefore, the assets held by them can be said to be its assets i.e. the assets of present Corporate Debtor, which is under the CIRP. The Corporate Insolvency Resolution Process was initiated and moratorium was passed on 25.10.2019, therefore, it prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor or its parent company, including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority. Section 14 read with Section 238 of Insolvency Bankruptcy Code, 2016 is applicable - Respondent No. 4, i.e., BPCL is directed to invoke both the Bank Guarantees immediately provided by the parent company of the Corporate Debtor, i.e., Albanna Engineering LLC, and to keep the proceeds in an interest-bearing fixed deposit with itself in the name and style of Bharat Petroleum Corporation Limited - Account Albanna Engineering until further orders - Respondent No. 4, i.e., BPCL is hereby directed to produce the original receipt of such deposit before the Registry of this Tribunal. Application disposed off.
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2020 (10) TMI 331
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - dues arising from the Leave and Licence Agreement - Operational Debt or not - existence of Pre-Existing Dispute prior to the issuance of the Demand Notice or not - HELD THAT:- The subject lease rentals arising out of use and occupation of a cold storage unit which is for Commercial Purpose is an Operational Debt as envisaged under Section 5 (21) of the Code. Further, in so far as the facts and attendant circumstances of the instant case on hand is concerned, the dues claimed by the First Respondent in the subject matter and issue, squarely falls within the ambit of the definition of Operational Debt as defined under Section 5 (21) of the Code. Pre-existing dispute or not - HELD THAT:- It is evident that the communication relied upon by the Counsel for the Appellant does not establish any substantial Pre-Existing Dispute . Applying the test of existence of a dispute it is evident that without going into merits of the disputes, the argument raised by the Appellant cannot be construed as a plausible contention requiring further investigation or an assertion of facts supported by evidence. The defence is spurious, mere bluster and not a tenable one in the eye of law, in the considered opinion of this Tribunal. A dispute does not truly exist in fact between the Parties and, therefore, this Tribunal holds that the communication on record specifically the letter dated 19.09.2018, addressed by the Appellant themselves prior to the issuance of the Demand Notice clearly establishes that there is a Debt due and payable and there is no Pre-Existing Dispute . This Tribunal holds that there is no illegality or infirmity in the Impugned Order of the Adjudicating Authority in admitting the Application - Application admitted - appeal dismissed.
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2020 (10) TMI 330
Seeking recalling of Resolution Plan as approved - rejection on the ground that the networth criteria, which was crucial, was overlooked and certificate produced by the Respondent No.3 in regard to its networth was fraudulent and sham which vitiated the whole exercise and approval of said Resolution Plan - HELD THAT:- It is not in dispute that as per eligibility criteria laid down by the CoC the Resolution Applicant was required to have a networth of ₹ 5 crores. Appellant is aggrieved of acceptance of bid of Respondent No.3 on the score that the Respondent No.3 did not comply with the networth eligibility. In this regard, it is pointed out that the networth certificate dated 1st October, 2018 shows the networth of ₹ 637.40 lakhs as on 31st August, 2018 qua M/s. Vaibhav Build Tech Pvt. Ltd., JSV Motors Constructions Pvt. Ltd. - It is brought to our notice that the Appellant has participated in Committee of Creditors meeting during CIRP process but never raised the issue with regard to the eligibility of Respondent No.3 as regards networth criteria. It is too late in the day to accept the argument emanating from the Appellant that the networth of the Resolution Applicant calculated on the basis of market value of fixed assets minus secured loans is not in accordance with the definition of networth under Section 2 (57) of the Companies Act, 2013. No objection to calculation having been raised at the relevant time and the criteria adopted for arriving at the conclusion in regard to networth not being shown to be fundamentally flawed and perverse, argument raised on this score is repelled. No objection on this score can be permitted to be raised by the Appellant after the Resolution Plan has been approved by the Committee of Creditors with huge majority of voting share. Objection in regard to valuation conducted by the Resolution Professional and approved by the Committee of Creditors is equally without substance. It is not disputed that two registered Valuers were appointed to determine fair value and liquidation value of the Corporate Debtor. Such valuation reports were placed before Committee of Creditors which in its 6th meeting held on 18th July, 2019 considered the same before approving the Resolution Plan. Implementation of the approved Resolution Plan is underway. Respondent No.3 is stated to have already deposited an amount of ₹ 30 lakhs being 5% of cash contribution of the Resolution Plan having total value of ₹ 22.10 crores. An upfront payment of ₹ 3 crores besides investment of ₹ 4.5 crores on building infrastructure for setting up plant and machinery for the Corporate Debtor is said to have been made by Respondent No.3 - The Appellant cannot be permitted to scuttle the process at this stage and that too without substantial grounds. No material irregularity in resolution process vitiating it, has been canvassed or brought to our notice, which would render the whole exercise unsustainable. The impugned order does not suffer from any legal infirmity or factual frailty - Appeal dismissed.
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2020 (10) TMI 329
Maintainability of application - initiation of CIRP - Corporate Debtor Debtor failed to make repayment of its dues - existence of pre-existing dispute or not - Service of notice - Condonation of delay in filing appeal - time limitation - Appeal is dismissed on the ground that the same is filed beyond 30 days from the date of passing of the impugned order which is beyond the statutory period as prescribed under Section 61(2) of the I B Code - HELD THAT:- In the present case, the notice issued against the Corporate Debtor returned unserved because of insufficient address . After that, without exploring the possibility of service by other modes like email, the Adjudicating Authority passed the order for substituted service by publication of notice in the newspaper. In such circumstances, passing of an order for an ex-parte hearing against the Corporate Debtor, based on substituted service, cannot be held proper in the light of the law laid down by Hon ble Supreme Court in the Neerja Realtors (P) Ltd [ 2018 (1) TMI 1536 - SUPREME COURT ]. Admittedly, in this case, the demand notice, dated 22nd March 2019, in Form-3, was issued against the Corporate Debtor by registered post, which could not be served on account of insufficient address. After that, the demand notice dated 21st May 2019 in Form-3 was again sent through speed post. On perusal of the email dated 14th July 2018, it appears that the Corporate Debtor objected to the posting of wrong revenue on barter ledgers . It also appears from a perusal of email correspondence dated 17th October 2018 that the Corporate Debtor objected to releasing post-dated cheque of ₹ 73 lakhs without keeping it informed to the Corporate Debtor. It is also stated in the email that management fees will be paid after the barter reconciliation issue is resolved. By perusal of email communication dated 17th January 2019, it appears that dispute was raised regarding the quality of services. On perusal of email dated 14th March 2019, it appears that the Corporate Debtor raised the issue regarding service rendered by the Operational Creditor. It also shows that the Corporate Debtor informed the operational Creditor of taking over the complete management in its own hands because of being dissatisfied with the services rendered by the Operational Creditor. All these correspondences are before issuance of demand notice. Thus, there was a pre-existing dispute regarding the operation of management and services provided by the Respondent No.1 before the issuance of the demand notice dated 21.05.2019 under Section 8 of the I B Code. In the present case, it is crystal clear that there was a pre-existing dispute, even though the Adjudicating Authority admitted the Application for initiation of Corporate Insolvency Resolution Process by the impugned order - petition admitted - moratorium declared.
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2020 (10) TMI 328
Approval of Resolution Plan - Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In K Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT ] the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon ble Court observed that the role of the NCLT is no more and no less . The Hon ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. Application allowed.
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2020 (10) TMI 327
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - whether Section 7 Application is maintainable, whether it is pursuant to the RBI Circular dated 12.02.2018, and if the ratio of Dharani Sugars [ 2019 (4) TMI 230 - SUPREME COURT ] is applicable? - HELD THAT:- On 07.02.2019, the Respondent Company filed WP (Civil) 169 of 2019 Mittal Corp. Ltd. V/s. Reserve Bank of India Or. and the Hon ble Apex Court on 13.02.2019 ordered the parties to maintain status quo . Thereafter, 02.04.2019 in Dharani Sugars (Supra), the Hon ble Supreme Court held that the Circular dated 12.02.2018 issued by the RBI was ultra vires to Section 35AA of the Banking Regulation Act, 1949. It is the main case of the Appellant that the total outstanding amount due and payable by the Corporate Debtor to the consortium is around ₹ 1,077/- Crs, out of which the Appellant s claim is ₹ 2,44,85,29,569.79/-. It is seen from the material on record that though the Appellant forms part of the Joint Lenders Forum (JLF), only the Appellant had filed the Application under Section 7 qua the debts owed by the Respondent Company to the Appellant and not on behalf of the JLF - the pre-requisite for the invocation of the said Circular is that there should be an aggregate exposure of the lender above ₹ 2,000 Crs. and in the instant case the total outstanding claimed debt amounts to ₹ 1,007/- Crs. out of which the amount claimed by the Appellant Bank is to the tune of ₹ 2,44,85,29,569.79/- Crs;. Additionally, it is seen, that for other accounts with aggregate exposure of the lender below ₹ 2,000/- Crs. and at or above ₹ 100/- Crs., the Reserve Bank intended to announce over a two-year period, reference date for implementing the RP to ensure time-bound resolution of all such accounts in default. Further, the documentary evidence filed before us does not evidence any such announcement made with respect to the subject matter. There is force in the contention of the Learned Counsel appearing for the Appellant that the said Circular is not applicable to the instant case and as a consequence the decision of Dharani Sugars (Supra) is also not applicable. The subject matter of the Circular was with respect to debts greater than ₹ 2,000/- Crs. and over on or after 01.03.2018, therefore, the contention of the Learned Counsel for the Respondent Company that the Minutes of the Meeting on 26.02.2018 read together with the Minutes dated 13.03.2018 establishes that Application under Section 7 is not maintainable as it is pursuant to the RBI Circular dated 12.02.2018, is untenable as we are of the considered opinion that the Circular itself is not applicable since the amount claimed as debt due and payable is less than ₹ 2,000/- Crs. and the process was initiated by JLF prior to the issuance of the Circular. Merely because the JLF Committee discussed the various offers and also the revised Plan from Tri Shakti and decided to examine the Proposals in light of the new guidelines issued by the RBI on 12.02.2018 and found that finalization of any Resolution Plan prior to 06.04.2018, as directed by the Hon ble High Court, would be difficult and decided to file an Application under Section 7 of IBC 2016, it cannot be construed that the decision to file the Application was initiated only pursuant to the RBI Circular - Further, it is an admitted fact that the subject account was declared as NPA in December 2017, with effect from June 2016, after the expiry of 18 months-time period under Strategic Debt Restructuring and Section 7 Application was filed before the lapse of the time-period of 180 days, for a default in existence much before the reference date i.e. 01.03.2018. It is an admitted fact that the Appellant filed an Application under Section 7, on 20.03.2018, much before the deadline of 180 days. Thus, in the absence of any cogent evidence to show that the Appellant has filed the Application only pursuant to the Circular issued by Reserve Bank of India, which we hold at the outset, was not applicable to the facts of the instant case, it was not open to the Adjudicating Authority to reject the Application on this ground - The Petition under Section 7 of the I B Code is to be considered by the Adjudicating Authority on its own merits taking into consideration the records - case remitted to the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, with a direction to decide the Admission of the Application on merits as expeditiously as practicable.
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2020 (10) TMI 326
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT:- It is pertinent to note that the applicant has placed on record all the invoices, stating that the respondent itself had acknowledged the said invoices. Once the debt is shown as due, it is for the respondent to prove that there are no outstanding dues to be paid to the applicant. There has been much cloud in the submission of the respondent. Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained. In Innoventive Industries Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ], the Hon'ble Supreme Court held that pre-existing dispute is the dispute raised before demand notice or invoices was received by the 'Corporate Debtor'. Any subsequent dispute raised while replying to the demand notice under Section 8(1) cannot be taken into consideration to hold that there is a pre-existing dispute. In the present case, there is no such dispute as pre-existing, the dispute which was being claimed to be pre-existing by the the corporate debtor did not survive - The applicant has filed an affidavit under Section 9(3)(b) stating that no notice of dispute from Corporate Debtor is received - The registered office of respondent is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. Time Limitation - HELD THAT:- On perusal of the record it is clear that the last payment was made by the Corporate Debtor on 17.11.2018. Hence, the claim is not time barred. And the present application is well within the limitation period. Thus, the present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Application admitted - moratorium declared.
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2020 (10) TMI 325
Implementation of Resolution Plan - incapable of implementation due to default in adhering to the payment schedule - Section 60(5) of I B Code - HELD THAT:- The instant IA is also liable to be dismissed in view of the judgment passed by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited [ 2019 (11) TMI 731 - SUPREME COURT ] and also the judgment of the Hon ble National Company Law Appellate Tribunal in Santosh Wasant Rao Walokar [ 2020 (4) TMI 385 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], as the instant IA was filed only on 06.01.2020 - there are no merit in the instant IA and accordingly the same is dismissed. Violation of Resolution Plan - HELD THAT:- The decisions of the Committee of Creditors passed with the required majority percentage as per the Code, are binding on all the stake holders, including the dissenting members of Committee of Creditors, if any. No member of the Committee of Creditors, after a resolution plan was approved by the Committee of Creditors with the required majority percentage, on one ground or other, cannot challenge the said decisions of the Committee of Creditors. It is for the Adjudicating Authority to apply its judicious mind whether a particular plan submitted for its approval is in compliance of the provisions of the Code and the Regulations made thereunder - Application dismissed. Approval of Resolution Plan - HELD THAT:- Admittedly, the Applicants have not lent any money to the Corporate Debtor. Therefore, they cannot be treated as the financial creditor of the corporate debtors. Though the claim of the applicant as a secured financial creditor was rejected by the Resolution Professional in 2017, the applicant has not challenged the same. The applicant having given up its right as a financial creditor of the Corporate Debtor by not challenging the rejection of its identical claim by the Resolution Professional, at the appropriate time, cannot now file the instant IA, belatedly, for the same relief. Its submission that it has not challenged the rejection of its claim as a financial creditor under the bona fide belief that its interest could be sufficiently protected and preserved under the LHG Resolution Plan, does not stand to the legal scrutiny - Application dismissed. Approval of Resolution Plan - Section 30(6) read with Section 31 and Section 60(5) of the Code, read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- With regard to the compliance under Regulation 35A, it is stated that CA No.297/2018 filed under Section 43 and 45 of the Code and application filed under Section 19 of the Code, are pending before this Adjudicating Authority and the same to be continued even after approval of the Resolution Plan - Further, the resolution plan fulfils all the requirements of Regulation 38 and 39 of the CIRP Regulations. A perusal of Regulation 38 would clearly show that by virtue of mandatory contents of resolution plan as discussed in the preceding paragraphs in relation to Section 30 and Section 31 of the Code, the requirement of Regulation 38 also stands fulfilled. Even the requirement of Regulation 39 has been satisfied, as the RP has submitted that the resolution plan of Resolution applicant, as approved by the Committee of Creditors, to this Tribunal along with the compliance certificate in Form H, as per the requirements of Regulation 39(4) of the CIRP Regulations meets all the requirements of the Code and the CIRP Regulations and that the resolution plan has been duly approved by the Committee of Creditors - we accept and approve the Committee of Creditors approved resolution plan of Resolution Applicant-DVI. Validity of the registered lease deed - HELD THAT:- Since, all the counsels are ad-idem that this adjudicating authority while exercising its jurisdiction under the provisions of Code, cannot decide the validity of a lease deed, we are of the considered view that there is no necessity for us to go and examine the various contentions of all the parties with regard to the said issue. Further, for the same reason i.e. execution of the registered lease deed even prior to the approval of the resolution plan by the Committee of Creditors, we need not go into the issue whether execution of the instant lease deed was a to be understood as a pre-condition for approval of the resolution plan, though the Plan stated otherwise. In this view of this matter, and for the aforesaid reasons and also in view of our observations at Paragraphs Nos.13(a) (i) and 18 of IA No.225/2020, there is no need to discuss the extensive arguments advanced and judgments relied on by both the sides, on the issues that whether the lease deed dated 28.01.2020, is valid or whether this Adjudicating Authority can compel the applicant to act in a particular manner in respect of the ACE Complex Land property on which it is claiming certain mortgage rights or whether granting of prayers in Section 9 of the Resolution Plan, along with Addendum, would prejudice the rights of the Applicant etc. - Application dismissed.
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2020 (10) TMI 324
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Whether the Corporate Debtor has raised any dispute as against the payment of the sum as claimed by the Operational Creditor in the present petition before issuance of the Demand Notice? - HELD THAT:- A perusal of the typed set of documents filed by the Corporate Debtor would reveal the fact that there are series of e-mails which have been exchanged between the parties even before issuance of the Demand Notice. On 17.12.2018, the Operational Creditor has sent a mail to the Corporate Debtor to clear the outstanding dues of ₹ 14,58,176/- for which the Corporate Debtor has sent a reply e-mail - It is clear that the fact that there exists a 'dispute' between the parties even before the issuance of the Demand notice. Further, it may also be noted that the proceedings before this Tribunal is summary in nature and this Tribunal, unlike the Civil Court cannot indulge in the luxury of taking evidence, oral or otherwise as to its existence. The Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] held that the 'existence of dispute' and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be. As to the facts of the case, it is seen that there exists dispute between the parties before the issuance of the Demand Notice itself and the contentions raised by Corporate Debtor is a plausible contention which requires further investigation and in the said circumstances, the Application is constrained to be dismissed - application dismissed.
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2020 (10) TMI 323
Winding up of Respondent Company - section 433(e), section 433(f) and 434 of Companies Act, 1956 - HELD THAT:- The Financial Creditor has established that the loan was duly sanctioned and duly disbursed to the Corporate Debtor but there has been default in payment of Debt on the part of the Corporate Debtor. The nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that admittedly there is a Default as defined under section 3(12) of the Code on the part of the Debtor - keeping the admitted facts in mind, it is found that the Financial Creditor has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Applicant, we are of the conscientious view that this Petition deserves 'Admission'. Application admitted - moratorium declared.
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2020 (10) TMI 322
Maintainability of application - initiation of CIRP - Salary, retention bonus and other dues of former employees - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Non-propsal of name of IRP - HELD THAT:- no material has been brought on record to show that operational creditor who was CEO of the company was in fact communicating with unauthorised person. In the case of Mobilox, the Hon'ble Supreme Court had clearly held that feeble contentions regarding pre existing dispute or other aspect cannot be given undue weightage so as to thwart the process of CIRP. In the present case, as stated earlier, a series of mails have been exchanged from the valid mail of the corporate debtor. The retention bonus has become due only on completion of the term, hence, it appears to be a case where such payment is not made merely for the reason that services have already been obtained which is quite commonly observed in real business situations when intention becomes not to pay. There is no merit in the contention of the corporate debtor for the reason that no specific format has been provided in the IBC or regulations made thereunder. In our view such Power of Attorney has been properly executed as per general practice. We are further of the view that the Doctrine of Substance over Form is to be applied in case of economic legislation like IBC 2016 so that its objectives to promote entrepreneurship and economic growth coupled with balancing of interest of all stake holders are achieved - Name of IRP has not been proposed which is not mandatory for application made under Section 9 of IBC. Hence, we will appoint the IRP from the approved list maintained by IBBI. In case such person does not accept the assignment, then another person would be appointed. This application is liable to be admitted. The application is otherwise complete in all respects - application admitted - moratorium declared.
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2020 (10) TMI 321
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The total amount of outstanding debt owed to the two Petitioners was ₹ 38,47,000 in respect of Petitioner No. 1, and ₹ 38,47,000 and ₹ 38,59,882 respectively to Petitioner No. 2 in respect of his two investments. The total debt works out to ₹ 1,15,53,882/-. The same has not been opposed before us and clearly amounts to a debt u/s 5(8)(c) of the Code. The Hon'ble Supreme Court in the case of Innoventive Industries Ltd. Vs. ICICI Bank Ltd., [ 2017 (9) TMI 58 - SUPREME COURT] held that the scope of enquiry of an Adjudicating Authority in an Application made under Section 7 is very limited. The moment the Adjudicating Authority is satisfied that a Default has occurred, the Application must be admitted. The Adjudicating Authority has to merely satisfy itself that a default has occurred, even if the default is disputed so long as it is due, unless interdicted by some law. Although Section 7(5) of the Code says that the Adjudicating Authority may admit or may dismiss a petition, looking at the facts of the case we are of the view that the petition needs to be admitted. A perusal of the Financial Statements of the Corporate Debtor for the FYs 2015-16, 2016-17 and 2017-18 gives the following picture: i) Its Liabilities increased from ₹ 55,55,96,184 as on 31.03.2016 to ₹ 62,79,11.936 as on 31.03.2017. ii) It earned a meagre profit of ₹ 1,25,983 as on 31.03.2017 and a loss of ₹ 15,87,734 as on 31.03.2016, from its operations; iii) Its cash flow statement showed a decrease in cash/cash equivalent of ₹ 2,59,11,523 as on 31.03.2017 over the preceding FY; iv) Its interest liability on Debentures alone as on 31.03.2017 was ₹ 2,19,18,544; v) As on 31.03.2018 (as per the information available on the MCA website) it had a negative Net Worth of 2,99,55,490; and total debts of ₹ 63,34,80,737 including the debt on account of NCDs. It is clear therefore, that the financial status of the Corporate Debtor is not healthy and indicates that it is not in a position to repay its debts. Apparently for this reason it has not come forward to oppose the Petition. This is a fit case for initiation of CIRP in respect of the Corporate Debtor M/s. Greens Farm Tech Private Limited. - Application admitted - moratorium declared.
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2020 (10) TMI 320
Exclusion of 30 days from the statutory period of 270 days - CIRP process - HELD THAT:- Reliance can be placed in the decision of the Hon'ble NCLAT in QUINN LOGISTICS INDIA PVT. LTD. VERSUS MACK SOFT TECH PVT. LTD., MOHD. SABIR PARVEZ AND MR. M.L. JAIN, (RESOLUTION PROFESSIONAL) [ 2018 (6) TMI 904 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], wherein, the Hon'ble NCLAT has dealt with the question of exclusion of certain time period for the purpose of counting the total CIRP period - it was held that If an application is filed by the Resolution Professional or the Committee of Creditors or any aggrieved person for justified reasons, it is always open to the Adjudicating Authority/Appellate Tribunal to exclude certain period for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion, in unforeseen circumstances. In addition to the above judgement, the judgement of Apex Court, Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ] has conferred power on the Adjudicating Authority to consider issue of exclusion time from statutory period prescribed under the provisions of Code, basing on justification for the same - The facts and circumstance, as stated supra, would justify for exclusion of time as prayed for. It is granted further exclusion of 30 (Thirty) days period from the statutory period of 180+90 days, in addition to earlier exclusion 154 54 days already granted in the case, to complete the Corporate Insolvency Resolution Process - application disposed off.
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Service Tax
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2020 (10) TMI 319
CENVAT Credit - input services - outward transportation services from factory to customer s premises - period in dispute i.e from January 2005 to December 2007 - HELD THAT:- In identical matter in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. VESUVIOUS INDIA LTD. [ 2013 (12) TMI 1025 - CALCUTTA HIGH COURT ], the issue was decided against the assessee. The said decision was further carried in appeal before the Hon ble Supreme Court which has settled the issue in favour of the assessee. In the said decision dated 17.01.2018, while deciding the batch of appeals filed by Department as well as assessees, COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT ], the Apex Court has inter-alia held that the assessee is legally eligible to avail credit on outward transportation availed from place of removal upto a certain point, whether it is a depot or customer s premises. In the instant case, the availment of credit on outward transportation from factory gate to customer s place pertains to period prior to April 2008 i.e. prior to period when the definition of input service was amended. Since the credit eligibility finally stands decided by the Apex Court in favour of assessee, the impugned adjudication order is liable to be set aside. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (10) TMI 318
Classification of goods - Di Calcium Phosphate Animal Feed Grade manufactured by the appellant by using rock phosphate - classified under Chapter 2309 as declared by the appellant or under chapter 2835 has claimed by the Revenue of the Central Excise Tariff Act, 1985? - HELD THAT:- Whether the Di Calcium Phosphate Animal Feed Grade is classifiable under chapter heading 2309 or under 2835, it is prima facie covered under exemption Notification No. 04/2016-C.E. (N.T.) issued under section 11C of the Central Excise Act, 1944. The applicability of this notification 04/2016-C.E. (N.T.) is vital, to decide the issue in hand, however, both the lower authorities have passed the order before issuance of the Notification No. 04/2016-C.E.(N.T.). Therefore, they did not have occasion to deal with this notification which has retrospective effect and it covers the period involved in the present case. The matter needs to reconsidered in the light of notification No. 04/2016-C.E. (N.T.) - Appeal allowed by way of remand.
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2020 (10) TMI 317
Jurisdiction - Rejection of Rebate Claim - case of Revenue is that as the issue relates to rebate of duty, the Tribunal has no jurisdiction to entertain the appeal whereas the right forum is Revisionary Authority, Additional/ Joint Secretary to the Government of India - HELD THAT:- There is no dispute that appellant have claimed rebate of duty paid on the goods exported through merchant exporters. Therefore, even though the Commissioner has given findings as regards unjust-enrichment, the nature of rebate is not altered. As against the export of goods, the duty is refunded as rebate claim and not as a normal refund. Therefore, we are of the clear view that this case relates to rebate of duty paid on export of goods. As per Section 35B (1) proviso (b), the Tribunal has no jurisdiction in the cases relates to rebate of duty. The appellant has liberty to approach the right form, Additional/ Joint Secretary to Government of India, Revisionary Authority by filing revision application. The appeal disposed of as non maintainable on the ground of jurisdiction without going into merits of the case.
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2020 (10) TMI 316
SSI Exemption - clubbing the clearances of job worker with that of the appellant - period April, 2008 to August, 2009 - benefit of N/N. 8/2003-CE dated 01.03.2003 - HELD THAT:- The similar issue has been decided in favour of the appellant under the similar facts and circumstances in the case of M/s.Mewar Hi-Tech Engg. Ltd. [ 2019 (8) TMI 1363 - CESTAT NEW DELHI ] , wherein this Tribunal held that the taxable event for the central excise duty is the manufacture of excisable goods, and the moment, there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes, manufacture takes place and liability to duty is attracted. Thus, the sale or the ownership of the end product is absolutely irrelevant for the purpose of taxable event under the scheme of the Central Excise Act, read with the Rules. Further, the job worker is not liable to pay duty only in the circumstances under the erstwhile Rule 57(F) of Central Excise Rules, 1944, or according to the present Rule 4 (5)(a) of CCR, 2004 read with the relevant Notification No.214/86-CE dated 25.03.1986, wherein the principal manufacturer gives an undertaking to the jurisdictional Central Excise Authority of the job worker to pay the duty. In the present case, admittedly, no such procedure was undertaken. Hence, under the scheme of the Act, ipso facto the duty liability is on the job worker - the appellant is not liable to pay any central excise duty for the goods got manufactured and cleared from the job worker s premises. Time Limitation - HELD THAT:- Admittedly, the appellant has maintained proper books of accounts register and vouchers of their transactions and has also disclosed such transactions before other Tax Authorities, as the appellant was not liable to pay central excise duty being an SSI Unit, not requiring registration under the Central Excise Provisions - the demand for the extended period of limitation is also not maintainable. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (10) TMI 366
Non independent application of mind by AO - Proceeding made on the basis of the Audit Reports/Inspection Proposals proceeded from the Enforement Wing or from ISIC Authorities - HELD THAT:- Assessing Officer has to independently consider the same, without being influenced by such proposals of the higher officials. Commissioner of State Tax, Chennai had issued Circular No.3 dated 18.01.2019, empowering the Assessing Authority to deviate from the proposals, without seeking for approval from the Enforcement Wing/ISIC Authorities. AO can independently deal with the assessment without being influenced by the proposals of the higher officials. See Madras Granites (P) Ltd. [ 2002 (10) TMI 767 - MADRAS HIGH COURT] and Narasus Roller Flour Mills Vs. Commercial Tax Office, (Enforcement Wing), Sankagiri and another [ 2015 (4) TMI 361 - MADRAS HIGH COURT] . All the impugned proceeding in the present Writ Petition, which proceeds on the basis of the proposals/reports of the Enforcement Wing/ISIC, is set aside and consequently, the matter is remanded back to the Assessing Officer. The Assessee is granted liberty to file his objections with all supporting documents, within a period of 30 days from the date of receipt of a copy of this order
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2020 (10) TMI 315
Requirement of pre-deposit - Is it necessary to consider the merit of the matter while making interim order - direction to deposit 10% of the disputed tax demand and interest along with 5% of disputed penalty involved in the appeal pending before it, for the year 2008-09 - Legality of the interim (impugned) order passed by the Tribunal, having regard to the wording of section 76(4) of the Act and the law governing the stay of recovery of tax during the pendency of appeals. HELD THAT:- The first proviso to Section 76(4), gives discretion to the Tribunal to entertain an appeal against an assessment order, without payment of whole or part of the amount in dispute, on the furnishing of security by the Appellant. First and foremost, we must give due regard to the fact that the proviso in question, conferring power to the Tribunal for dispensation, is legislated to be an exception. The main provision puts an obligation on the Tribunal to not entertain an appeal against an assessment order, unless it is accompanied by satisfactory proof of the payment of the disputed amount. This makes the payment of the disputed amount a mandatory condition for entertaining an appeal - The objective behind the requirement of recording of reasons is that it would disclose the rationale of the authority and ensure that exercise of power is not done arbitrarily or for extraneous reasons. It will also ensure that the superior court, while exercising judicial scrutiny, is able to examine whether the tribunal has applied its mind and also discerned if the satisfaction arrived at has reasonable nexus to the facts and the law involved in the case. The guiding principles for grant of stay order, pending disposal of a matter before the concerned forum, have been well-entrenched by way of several judicial pronouncements. It is a settled principle of law that the Courts must consider the prima facie merits of the case, the balance of convenience, and the possibility of causing irreparable injury to the parties, while considering an application for grant of stay. However, the revenue contends that the wording of the statute is water-tight and requires the Tribunal to insulate itself from the above, while exercising its discretion for dispensation of the pre-deposit amount. We do not agree. The Supreme Court in MEHSANA DIST. CO-OP. MILK PU. LTD. VERSUS UNION OF INDIA [ 2003 (3) TMI 113 - SC ORDER ] , had remanded the case to the Appellate Authority, on the ground that the Appellate Authority did not apply its mind, gave unsatisfactory reasons, and focused only on prima facie balance of convenience without addressing the prima facie merits of the case, in the impugned order. It can be concluded that the prima facie merits of the case are an important factor to be taken into account at the stage of deciding a stay application. The first proviso of Section 76(4) of the Act gives the discretion to the Appellate Tribunal to dispense with the requirement of a pre-deposit. The provision is widely worded and does not put any fetter or constraint on the Tribunal. The prima facie view of the merits of the matter is one of the cornerstones of any application seeking dispensation of the pre-deposit. No application for dispensation can be decided devoid of an inquiry into the demonstrable merits of the case. Supreme Court, too, has disapproved the approach of deciding the stay application without analysing the factual scenario involved in a particular case. If an Appellant has a strong prima facie case and on a cursory glance it appears that the demand raised completely lacks foundation, this aspect of the matter has to be necessarily considered by the Appellate Tribunal while deciding the application under Section 76(4) of the Act. The discretionary power is not to be exercised as a matter of course. It is only in such cases where the Tribunal would find that there is a very strong prima facie case made out in its favour, should the Tribunal consider whether to grant stay and dispense with the pre-deposit in terms of Section 76(4) of the Act. On the face of it, the Tribunal must be satisfied that the entire purpose of the appeal would be frustrated or rendered meaningless by allowing the recovery proceeding to continue during the pendency of the appeal. The Tribunal also has to be mindful of the consequences that would follow from an order that required the Assessee to deposit the whole or part of the demanded amount. While exercising this discretion, the Tribunal should not act in a mechanical manner and exercise discretion after taking into account the totality of circumstances which include the prima facie case of the Appellant. In the present case, the Tribunal has declined to go into the merits of the case. The prima facie case of the Appellant has not been evaluated by the Tribunal while exercising its discretion under Section 76(4) of the Act. The Appellant had pleaded strong prima facie case for complete waiver of pre-deposit, on the several grounds - all the aspects enumerated above are pertinent. Unfortunately, the same have not been taken into consideration. While the Tribunal is correct in observing that these questions would have to be examined when the appeals are taken up finally on for disposal, but at the same time, these aspects would also have to be cursorily examined for arriving at the satisfaction about the prima facie on merits, for deciding the stay application. Let the matter be remanded back to the DVAT Appellate Tribunal. The Tribunal shall now decide the application under Section 76(4) of the Act afresh, having regard to the views expressed by us in this order, after affording opportunity to both the parties for hearing - Appeal allowed by way of remand.
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2020 (10) TMI 314
Prayer for stay of interim order - cancellation of registration certificate of petitioner - petitioner had not sold any of the products covered by the Maharashtra Value Added Tax Act, 2002 during the relevant period - HELD THAT:- The decision in the case of Carpo Power Limited [ 2018 (4) TMI 146 - PUNJAB AND HARYANA HIGH COURT ] is applicable to the facts of the present case where it was held that Also, Special Leave Petition filed by the State of Haryana against the aforesaid decision was dismissed by the Supreme Court holding that there was no legal and valid ground for interference. There shall be stay of the impugned order dated 05.03.2020 till the returnable date and as a consequence respondents are directed to issue the necessary C forms on the basis of the registration certificate - Stand over to 27.10.2020.
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Wealth tax
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2020 (10) TMI 313
Maintainability of appeal - limit fixed by the CBDT for the revenue to pursue the appeals - HELD THAT:- Substantial questions of law have to be answered against the revenue, in the light of the Circular issued by Central Board Direct Taxes [for brevity, 'CBDT'] bearing Circular No.5/2019 dated 05.02.2019. Whether Tribunal erred in dismissing the appeals on the ground of law tax effect without taking note of the fact that the revenue audit objection is there in the assessee's case and therefore, the cases would come within the exemption culled out in the circular? - It is not clear what is the revenue audit objection in the instant matter. Nevertheless, we have heard the learned counsel for the parties on the merits of the matter. The issue pertains to valuation of a property in Neelankarai village. The assessee contended that the property falls within the high tide zone and in the terms of the coastal zone regulations, the property cannot be put to use for the purpose of constructing any building there on and even if an application is made to the local planning authority / local body, the same will be rejected, as the planning authorities have no jurisdiction to deal with any application for grant of planning permission on a land, which falls within CRZ limits. No question of law arises for consideration in the instant cases and therefore, we are not inclined to entertain the appeals filed by the revenue. As mentioned above, the substantial question of law no.3 raised by the revenue is, stating that the Tribunal ought not to have rejected the revenue's appeal on the ground of low tax effect, without noting the revenue audit objection. Since we have decided in favour of the assessee on merits, substantial question of law no.3 does not arise for consideration.
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Indian Laws
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2020 (10) TMI 312
Dishonor of Cheque - Offences punishable u/s 138 of NI Act - rebuttal of resumption - Sections 118 and 139 of the Act - HELD THAT:- Section 118 of the Act provides certain presumptions to be raised laying down some special rules of evidence relating to presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments in financial transactions. Section 118 of the Act provides presumptions to be raised until the contrary is proved, (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp and (vii) as to holder being a holder in due course. That apart, Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. Having regard to the materials on record, this Court is of the view that the accused failed to adduce evidence to rebut the presumption or a probable case to shift the burden to the complainant. On going through the impugned judgment, this Court is of the view that the appellate court correctly applied the presumption under Section 139 of the Act. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. Even a blank cheque leaf voluntarily signed and handed over by the accused, which is to some payment, would attract the presumption under Section 139 of the NI Act in the absence of cogent evidence to show that the cheque was not issued in discharge of a debt. PW1 adduced evidence to show that he had advanced the amount and the cheque was given to him in repayment of the same. On analyzing the entire evidence in detail, the trial court as well as the appellate court entered a finding that the offence under Section 138 of the NI Act is proved beyond doubt. No interference is warranted in revision. The sentence imposed by the trial court as confirmed by the appellate court stand modified as follows; i.The revision petitioner/accused is sentenced to pay a fine of ₹ 75,000/- and in default of payment of fine to undergo simple imprisonment for three months. ii. In view of the Covid-19 pandemic, the revision petitioner/accused is given six months time to deposit the amount before the trial court. Thus, the fine amount shall be deposited in the trial court within six months time from this date, failing which the accused shall undergo simple imprisonment for three months. iii. In case, the fine amount is deposited as ordered, the same shall be released to the 1st respondent/complainant as compensation in accordance with law - Revision petition allowed.
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2020 (10) TMI 311
Dishonor of Cheque - Territorial Jurisdiction for initiation of proceedings - payee/complainant bank is having account only at Calcutta, the presentation of cheques at Chennai - offence u/s 138 of NI Act - HELD THAT:- Section 142(2)(a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015 vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction of the Court, where the cheque is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account) - In this case, the petitioners are doing business at Calcutta and they are residing only at Calcutta. Further, they availed loan from the respondent bank at Calcutta branch and issued the cheques only to the Calcutta branch. The respondent bank could have presented the said cheques at Calcutta branch itself, but it has presented the said cheques at Chennai branch and for that the respondent bank has not stated any reason. As per the decision of the Delhi High Court in Good Luck Traders Vs. State and Others [ 1779123 ], merely because the cheque has been presented at non-home branch of drawee bank, it does not in any manner become the drawee bank. As per Sub-section (2) of Section 142 of the Negotiable Instruments Act, 1881, amended through the Negotiable Instruments (Amendment) Act, 2015, the offence under Section 138 of the Negotiable Instruments Act shall be inquired into and tried only by a court within whose local jurisdiction the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course maintains the account is situated, except in cases of bearer cheques, which are presented to the branch of the drawee bank and in that case, the local court of that branch would get jurisdiction. Explanation to Sub-section (2) of Section 142 of the Act clarifies that even if the cheque is presented for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been presented to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account - In this case, since payee/complainant bank is having account only at Calcutta, the presentation of cheques at Chennai, shall be deemed to be presented at Calcutta Branch. Hence, the Courts at Calcutta alone will have jurisdiction and not the Courts at Chennai. Therefore, the cognizance taken by the VII Metropolitan Magistrate, George Town, Chennai is liable to be quashed. The cognizance taken by the VII Metropolitan Magistrate, George Town, Chennai is quashed. The learned VII Metropolitan Magistrate, George Town, Chennai is directed to return the complaint to enable the complainant to present the same before the Court having territorial jurisdiction (Court at Calcutta) - Petition allowed.
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2020 (10) TMI 310
Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - whether the judgment of conviction and order on sentence passed by the trial court and confirmed by the session judge's court is incorrect and suffers with any illegality or perversity, warranting interference at the hands of this court? HELD THAT:- Both the trial court as well as the session judge's court have rightly held that the defence of the accused that he had paid a sum of ₹ 1,00,000 to one Sri Ramesh Kumar at the behest of the complainant is not proved which is a properly reasoned correct finding. Thus, both the trial court as well as the session judge's court have rightly rejected the defence taken up by the accused and have rightly convicted the accused for the alleged guilt. I do not find any illegality, impropriety or perversity in the said finding of those two courts. The quantum of sentence ordered also being proportionate to the gravity of the proven guilt, there is no necessity for this court to interfere with the finding given by the trial court and the session judge's court - Revision dismissed.
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