TMI Tax Updates - e-Newsletter
February 11, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Highlights / Catch Notes
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GST:
Parallel proceedings - Validity of summons issued - Summons challenged on the ground that both the Central and State Authorities do not have powers to initiate proceedings against the petitioner simultaneousl - Necessarily, the petitioner will have to participate in the personal hearing and state all his objections with regard to the action launched by the State Authority under the TNGST Act, 2017. Unless and until the petitioner participates in the impugned proceedings viz., the impugned Summons dated 18.10.2022, truth cannot be unearthed with regard to the petitioner's contentions - HC
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GST:
Validity of SCN - Levy of penalty - CIRP under IBS has been initiated - Since the adjudication proceedings are yet to commence, the better course would be to permit the Petitioners to raise all the pleas that they have urged in the present petitions in their reply to the impugned SCN that has been challenged in these writ petitions and for the adjudication proceedings to be concluded in a timebound manner. - HC
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Income Tax:
Reopening of assessment u/s 147 - reasons to believe - A.O. had no tangible evidence to initiate the re-assessment proceedings against the petitioner and the impugned action is based sheerly on borrowed satisfaction. Even if it is assumed for argument's sake that the transaction made by the petitioner for acquisition of immovable property at Pali may be read in place of Delhi, then also, the said transaction is duly mentioned in the return filed by the petitioner for the relevant financial year and is supported by the audited balance-sheet, which was accepted by the Assessing Officer. - HC
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Income Tax:
Validity of reopening of assessment - Notice in the name of company amalgamated - corporate death of an entity upon amalgamation - The actions of the respondent – authority issuance of notice under Section-148 deserves to be interfered with. The show-cause notices issued by the respondents are quashed and set aside with consequential reliefs. This could not in any manner preclude the respondent to initiate the action against the present petitioners in accordance with law. - HC
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Income Tax:
Reopening of assessment u/s 147 - The words ‘ reason to believe’ appearing in Section 147 cannot mean that the A.O should have finally ascertained the facts. Assessing Officer merely forms a ‘belief’ from the examination he makes and if escaped assessment, it would amount to saying that he has ‘ reason to believe’ that such income has ‘escaped assessment’. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. - HC
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Income Tax:
Waiver of interest u/s 234B - interest in defaults in payment of advance tax - The phrase ‘or otherwise’ used in Section 234B(2) would encompass situations of remittances made in any other context, wherein the amounts paid stood to the credit of the petitioner. - there is a delay of one and two years respectively, as the amounts for which credit is sought ought to have been remitted in FY 2010-11, relevant to AY 2011-12. To this extent, the petitioner is liable to interest in terms of Section 234B. - HC
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Income Tax:
Nature of expenses - co branding fees - capital expenditure or revenue expenditure - Assessee did not have absolute ownership of brand name of AMW and merely obtain right and license to use the said brand name on the products manufactured by the assessee. The use of the co brand license product was also only for one customer i.e. AMW itself. - claim allowed - AT
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Income Tax:
Initiation of reassessment proceedings - AO has nowhere brought out as to how the claim of depreciation at higher level in the original assessment proceedings can be construed as failure of the assessee to disclose fully and truly all facts necessary for assessment. It is only change of the opinion by the AO, which in our considered opinion, cannot lead to initiation of reassessment proceedings after a period of four years from the end of the relevant assessment year. - AT
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Income Tax:
Unexplained cash credit u/s.68 - double taxation - taxing the source of investment and application of investment both - When an income is taxed / addition is made to taxable income in an earlier year, the assessee may claim that the income arising in subsequent year / subsequent period is sourced out of the income taxed earlier. - The credit is claimed only for the advance shown in the balance sheet that was treated as unexplained credit u/s 68 - AT
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Income Tax:
Exemption u/s. 54B denied - Assessee did not file return of income - As observed on the amendment in section 139(1) of sixth Proviso, section 54, section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB were inserted by the Finance Act, 2019 which is effective from 01.04.2020, but the impugned case on hand is related to the AY 2006-07. It indicates that the exemption u/s 54B can be claimed without filling of return of income before such amendment - AT
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Income Tax:
Proceedings before the CIT after transfer / posting - proceedings are continuous, merely because on change of incumbent, fresh show cause notice was issued, it cannot be construed to mean that it is fresh show cause notice especially in view of the fact that there is no evidence on record to show that earlier show cause notice was dropped. Thus, the appellant himself is responsible for delay in culminating the proceedings into the final order. Appeal filed by the assessee is dismissed. - AT
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Income Tax:
Assessment u/s 153A - Addition u/s 69 - Ld. AO himself did not have with him any seized material and what he had was merely information. The electronic evidences allegedly recovered from the CFO of Indiabulls Group had never reached the hands of the ld. AO. The co-terminus power of Ld. CIT(A) to put to the assessee can only stand to the material available on record - No additions - AT
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Income Tax:
Exemption u/s 11 - Scope of newly inserted section 11(6) - Depreciation on assets - Double benefit - Apex Court has as settled the issue - amendment brought in Section 11(6) of the Act vide Finance Act, no. 2 / 2014 is prospective in nature, from assessment year 2015-1,6 while the present year under consideration is A.Y. 2014-15. - AT
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Customs:
Seeking for redemption of Indian and Foreign currencies confiscated - Absolute confiscation - When it is not in dispute that the petitioner has violated Regulation 5 of Foreign Exchange Management (Export and Import Currency) Regulations 2015 and that too when the confiscation order has attained finality and that too when the impugned orders are not perverse, this Court while exercising powers under Article 226 of the Constitution of India has to necessarily reject this writ petition as it is bereft of any merit. - HC
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Customs:
Penalty imposed on the Respondents under Section 112(a) and (b) of the Customs Act, 1962, dropped - Respondents had admitted to have been involved in several smuggling activities - it is found that except the statements recorded by the DRI dated 10.06.2019 and 11.06.2019 which were retracted by the Respondents on the first opportunity available on 12.06.2019 before the Ld.CMM, Kolkata, no other corroborative evidence has been brought on record. In that circumstances penalty on the Respondents are not imposable. - AT
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Corporate Law:
Seeking restoration of the name of the Company in the Register maintained by the ROC - the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations - the name of the Appellant Company be restored subject to the compliances fulfilled - AT
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IBC:
CIRP - Moratorium is in force - Seeking constitution of an arbitral tribunal - the constitution of an arbitral tribunal, at this juncture, would be premature - After the moratorium ends, in case the petitioner were to succeed in the defence before the NCLT and the NCLT concludes that the petitioner did not guarantee the relevant debts, it would be open to the petitioner to initiate proceedings for the constitution of an arbitral tribunal to adjudicate the dispute - HC
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IBC:
Initiation of CIRP - NCLT dismissed the application on the ground that petitioner failed to prove the debt and the liability to pay the same by the corporate debtor - To reiterate, an Agreement has been entered into only for Season-2 and in the absence of any such Agreement for the other seasons, the Appellant/Operational Creditor has failed to discharge its burden that there was indeed an Operational Debt which was due and payable. - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (2) TMI 363
Unauthorized and fraudulent claim of input tax credit in respect of Goods and Services Tax - setting up a number of fictitious companies, which were being used for purposes of defrauding the Government - HELD THAT:- The present applicant has been in judicial custody since 17.07.2021, the chargesheet and the supplementary chargesheet have already been filed. This Court is of the view that the present applicant is similarly placed to the co-accused Pulkit who has already been granted bail by a coordinate bench of this Court vide order dated 12.04.2022 in BAIL APPLN. 21/2022 - As per the status report, there are no prior criminal antecedents of the present applicant and no useful purpose will be served by keeping the applicant in judicial custody any further. The applicant is admitted to bail upon his furnishing a personal bond in the sum of Rs. 1,00,000/- alongwith two sureties of the like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the terms and conditions imposed - application allowed.
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2023 (2) TMI 362
Cancellation of GST registration of petitioner - petitioner had not filed GST return for a continuous period of six months - HELD THAT:- Issue raised in this writ petition is no longer res integra. In M/S. CHENNA KRISHNAMA CHARYULU KARAMPUDI VERSUS THE ADDITIONAL COMMISSIONER APPEALS1 AND ANOTHER [ 2022 (7) TMI 82 - TELANGANA HIGH COURT] , which has been followed in subsequent decisions, this Court had remanded the matter back to the file of the primary authority to reconsider and pass appropriate order after giving opportunity of hearing to the petitioner. Following the above, the order of respondent No.5 dated 12.11.2018 and order of respondent No.3 dated 30.01.2023 are set aside and matter remanded back to the file of respondent No.5 to consider the matter afresh and after giving a reasonable opportunity of hearing to the petitioner, to pass appropriate order in accordance with law.
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2023 (2) TMI 361
Parallel proceedings - Validity of summons issued - Summons challenged on the ground that both the Central and State Authorities do not have powers to initiate proceedings against the petitioner simultaneously under the respective GST Acts with regard to the same subject matter - HELD THAT:- Admittedly, the petitioner has not participated in the personal hearing and instead he has chosen to file this Writ Petition, challenging the impugned Summons. Necessarily, to substantiate his defence that he cannot be once again prosecuted by the State Authority under the TNGST Act, 2017, he has to participate in the enquiry to be conducted by the fifth respondent and only then it can be ascertained whether the proceedings initiated by the Central and State Authority are one and the same involving the same subject matter. Truth will come out only when the petitioner appears before the respondent pursuant to the Summons received by him and not otherwise - If it is the same subject matter, the State Authority cannot prosecute the petitioner once again as the Central Authority has already initiated action against the petitioner in respect of the very same subject matter. Necessarily, the petitioner will have to participate in the personal hearing and state all his objections with regard to the action launched by the State Authority under the TNGST Act, 2017. Unless and until the petitioner participates in the impugned proceedings viz., the impugned Summons dated 18.10.2022, truth cannot be unearthed with regard to the petitioner's contentions - Since the petitioner did not participate in the personal hearing afforded to him as per the impugned Summons, this Court deems it fit to grant one more opportunity for the petitioner to participate in the personal hearing. This Writ Petition is disposed of by directing the petitioner to appear before the fifth respondent on 16.02.2023 at 10:30 a.m. without fail and state all his objections in line with his reply dated 27.10.2022 sent to the impugned Summons and the fifth respondent shall consider the petitioner's objections on merits and in accordance with law and thereafter, decide as to whether the petitioner can be prosecuted once again under the TNGST Act, 2017 when the Central Authority has already prosecuted him under the CGST Act, 2017.
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2023 (2) TMI 360
Rejection of application seeking refund - rejection on the ground of violation of principles of natural justice - calling petitioner for physical / virtual hearing within a period of seven days from the date of the show cause notice - HELD THAT:- Admittedly, the show cause notice dated 21.11.2022 issued at 18:17:33 hrs to the petitioner, calls upon the petitioner to submit a reply within a period of 15 days. But, however, in the very same show cause notice, the petitioner has been called upon to appear before the respondent on 28.11.2022 at 03:00 p.m. either through physical / virtual hearing. Having given time for the petitioner to submit a reply within a period of 15 days from 21.11.2022 at 18:17:33 hrs, the respondent ought not to have called the petitioner for physical / virtual hearing on 28.11.2022 at 03:00 p.m. within a period of seven days from 21.11.2022 being the date of the show cause notice. Learned standing counsel appearing for the respondent has also received instructions and does not dispute the statements made by the petitioner in the Affidavit filed in support of this Writ Petition with regard to the dates and events. Therefore, it is made clear that the principles of natural justice has been violated by the respondent before passing of the impugned order rejecting the petitioner's application seeking for refund. The impugned order has to be quashed and the matter has to be remanded back to the respondent for fresh consideration on merits and in accordance with law, within a time frame to be fixed by this Court - Petition disposed off.
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2023 (2) TMI 359
Validity of SCN - Levy of penalty - CIRP under IBS has been initiated - SCN issued invoking inter alia Section 122(1A) of the Central Goods and Services Tax Act, 2017 (CGST Act), which provides for penalties - HELD THAT:- Since the adjudication proceedings are yet to commence, the better course would be to permit the Petitioners to raise all the pleas that they have urged in the present petitions in their reply to the impugned SCN that has been challenged in these writ petitions and for the adjudication proceedings to be concluded in a timebound manner. The Court also does not consider it appropriate therefore to express any view on any of the contentions raised in these writ petitions at the present stage. The following directions are issued: (i) Each of the Petitioners will file their replies to the impugned SCN positively on or before 1st March, 2023; (ii) The Petitioners are permitted to urge all the pleas available to them in law, including the ones urged in the present petitions, in their reply to the impugned SCN. (iii) The adjudicating authority will take into account all such pleas and deal with them in the adjudication order to be passed after giving the Petitioners an opportunity of hearing and considering their requests, if any, as regards summoning persons or documents in accordance with law. (iv) The Court clarifies that it has not expressed any view in the matter. Needless to say that if the Petitioners are aggrieved by the adjudication order it will be open to them to seek appropriate remedies in accordance with law. Petition disposed off.
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2023 (2) TMI 324
Rejection of claim of ownership made by the petitioner in respect of the goods in question - contrary to Clause 6 of the clarificatory Circular No. 76/50/2018-GST dated 31st December, 2018, issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing or not - petitioner says that the detained goods in question is accompanied by the tax invoice and eway bill which have already been uploaded in the portal - HELD THAT:- The respondent GST authority concerned prays for time to take written instruction in the aforesaid regard. List this matter on 3rd January, 2023 under the same heading and same position to enable Mr. Ghosh to take proper instruction.
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Income Tax
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2023 (2) TMI 358
Reopening of assessment u/s 147 - reasons to believe - objections submitted by the petitioner against the reasons to believe and reopening of proceedings were turned down - unexplained investment in property - HELD THAT:- Petitioner had not procured any property at Delhi with the description C-152, Nirman Vihar, Delhi during the financial year 2016-2017. It was emphatically mentioned in this letter that the assessee had rather purchased land located at plot No.A-4, Nextgen Textile Park, Sardarsamand Road, Pali from M/s. Nextgen Textile Park, Private Limited having its registered office at C-152, Nirman Vihar, Delhi. This transaction was duly disclosed in the audited financial statement, i.e. balance-sheet and fixed asset chart as well as the return of income filed by the petitioner for the Assessment Year 2016-17. It was asserted that the reasons formed by the A.O. were based merely on suspicion, assumptions and conjectures and there was nothing in the communication dated 28.06.2021, which could suggest that there was any material to support the allegation/assumption of non-disclosure of land transaction. As from reasons for reopening the assessment it becomes clear that the same are founded on a non-existent transaction of purchase of immovable property situated at C-152, Nirman Vihar, Delhi. In spite of the petitioner elaborating in its reply as well as objections that it had never entered into any such transaction, the respondent authorities made no effort whatsoever to rectify the blatant blunder and instead they have tried to justify the fundamentally flawed reopening proceedings on entirely a new ground that the petitioner did not upload the financial statement with the return and that the details of the land transaction were not mentioned in the Schedule 6 of the balance sheet. This observation of the authority is also incorrect on the face of record because the balance-sheet was admittedly uploaded with the return filed by the petitioner pursuant to receiving the notice under Section 148 of the Income Tax Act. In Schedule 6 of the balance sheet, transaction pertaining to procurement of immovable property is clearly stated. The very foundation of the impugned notice, the reasons to believe and the order turning down objections is non-existent. All the three proceedings are based sheerly on conjectures and surmises. A.O. had no tangible evidence to initiate the re-assessment proceedings against the petitioner and the impugned action is based sheerly on borrowed satisfaction. Even if it is assumed for argument's sake that the transaction made by the petitioner for acquisition of immovable property at Pali may be read in place of Delhi, then also, the said transaction is duly mentioned in the return filed by the petitioner for the relevant financial year and is supported by the audited balance-sheet, which was accepted by the Assessing Officer. Hence, there is no escape from the conclusion that no tangible material was available with the Assessing Authority so as to initiate the re-assessment proceedings against the petitioner by taking recourse to the provisions under Section 148 and 143 (2) of the Income Tax Act. Decided in favour of assessee.
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2023 (2) TMI 357
Validity of reopening of assessment - Notice in the name of company amalgamated - corporate death of an entity upon amalgamation - HELD THAT:- The controversy in the present petition, is no longer res integra. The Apex Court in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited ( 2019 (7) TMI 1449 - SUPREME COURT] has categorically held that if the company has ceased to exist as a result of the approved scheme of amalgamation then in that case, the jurisdictional notice issued in its name would be fundamentally illegal and without jurisdiction. It is also held that upon the amalgamating entity ceasing to exist, it cannot be regarded as a person under subsection (31) of section 2 of the Act; against whom assessment proceedings can be initiated. The Apex Court has further held that participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law. Similarly, this court, in the judgment in the case of Dharamnath Shares and Services (P) Ltd. [ 2018 (5) TMI 1369 - GUJARAT HIGH COURT] while referring to its earlier decision in the case of Khurana Engineering Limited [ 2013 (2) TMI 128 - GUJARAT HIGH COURT] held that once the assessee company gets amalgamated with the transferee company, its independent existence does not survive and therefore it would no longer be amenable to the assessment proceedings. Thus, it is well settled proposition of law that upon its amalgamation the transferor company ceases to exist and becomes extinct, and it would no longer be amenable to the assessment proceedings considering the fact that the extinct entity would not be covered within the ambit of the provisions of the Act. The petitions here also are allowed. The actions of the respondent authority issuance of notice under Section-148 deserves to be interfered with. The show-cause notices issued by the respondents are quashed and set aside with consequential reliefs. This could not in any manner preclude the respondent to initiate the action against the present petitioners in accordance with law.
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2023 (2) TMI 356
Reopening of assessment u/s 147 - Deduction available under Section 115 JA - HELD THAT:- The appellant was entitled for the reduction of the amount of loss brought forward or unabsorbed depreciation, which ever was less as per the books of account. As per the above Explanation to Section 115JA of the Income Tax Act, 1961, the appellant could reduce the income only from the loss brought forward. However, in the returns filed by the appellant, the appellant had reduced both the amount namely the loss brought forward and the unabsorbed depreciation. The appellant had mislead the Department regarding the deduction available under Section 115 JA of the Income Tax Act, 1961 which was sought to be rectified by invoking under Section 148 for the purpose of Section 147 r/w 143(3) of the Income Tax Act, 1961. In case, Assessing Officer found a cause or justification to believe that income had escaped assessment. The Assessing Officer was not required to base his belief on any final adjudication of the matter. Commissioner of Income Tax (Appeals) vide has stated that the directions of the CIT (A)-1, Coimbatore in his order was only consequential in nature to alter the Calculation of 115 JA while giving effect to his orders in the original calculation of regular profits. The return that was filed was not a proper return. The returns that was filed, had incorrect entries and contrary to the mandate of Section 115JA of the Income Tax Act, 1961. While in taxing matters assessment are intended to bring a finality, they are not to be continued, if the returns filed were inspired within a view to cheat the Government. Therefore, the decision cited in the case of Commissioner of Income Tax vs. Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT] and other decisions cannot be applied to the facts of the present case. As invocation of power under Section 147 r/w 143 of the Income Tax Act, 1961 was not motivated any kind of change of opinion. The impugned order of the Appellate Tribunal correctly holds that the power to make assessment or reassessment, where the initiation has been made within four years of the end of the relevant assessment year, would be attracted even in cases where there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance and whether it is an error of fact of law that has been discovered or found out justifying the belief required to initiate the proceedings. In this case, the appellant has resorted to deception and hoodwinking the revenue to evade tax. The words reason to believe appearing in Section 147 cannot mean that the A.O should have finally ascertained the facts. Assessing Officer merely forms a belief from the examination he makes and if escaped assessment, it would amount to saying that he has reason to believe that such income has escaped assessment . The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. This issue was never dealt with at the time of original assessment or at the appellate stage. It cannot be said that there was any change of opinion and therefore the proceeding initiated under Section 147 of the Act, 1961, by issuing of notice under Section 148 on 30.04.2004 was invalid to nullify the assessment order dated 08.02.2006 passed under Section 143(3) r/w Section 147 of the Act dated for the Assessment Year 2000-2001. We are therefore of the view that the substantial questions of law is to be answered against the appellant. The order passed by the Assessing Officer does not suffer from any infirmity.
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2023 (2) TMI 355
Waiver of interest u/s 234B - interest in defaults in payment of advance tax - scope of Notification in F.No.400/234/95-IT(B), dated 23.05.1996, which sets out certain explicit situations where waiver of interest under Section 234B may be considered - as argued since capital gains has been specifically excluded under clause (c) of the above Notification, it is a conscious decision of the Legislature and of the Central Board of Direct Taxes, to exclude capital gains, as a head of income, from the ambit of waiver - HELD THAT:- The above Notification is not relevant for the purposes of this case. The situation contemplated in clause (c) is one where income chargeable under a head other than capital gains , is received or has accrued after the due date of payments of the first or second instalments of advance tax. Such a situation does not arise in this matter as the entire consideration has not just been received but also offered to tax in the respective assessment years. That apart, the contents of a Notification cannot stand in the way of this Court, or limit its interpretation, of statutory provisions. Reliance upon the Notification is thus found to be misplaced and this argument rejected. Delay in payment of advance tax - It is an admitted position that the advance taxes relevant to AYs 2012-13 and 2013-14 have been paid in time, in the course of financial years 2011-12 and 2012-13 respectively. The re-assessments in this case transpired on 29.12.2017. The charge of interest under Section 234 B is mandatory and to compensate in delay in payment of advance tax as has been categorically settled in the case of CIT V. Anjum Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] - Thus, there is no doubt in mind that the request for waiver is to be considered strictly in light of the statutory prescription. The use of the phrase or otherwise would apply to all and any payments made by an assessee, including, in this case, advance tax paid for the subsequent two assessment years. Needless to state, any delay in effecting such remittances would have to be duly compensated by the petitioner. The payments in the present case are not adhoc, and have been made specifically towards advance tax for liability towards capital gains in FYs 2011- 12 and 12-13. Moreover, the Department has been in possession of the entire amounts from FY 2011-12 and 12-13, as the assessee has long satisfied the demands for the corresponding assessment years by way of advance and selfassessment taxes. It is the aforesaid amounts that have been adjusted against the liability for AY 2011-12. The exercise is substantially revenue neutral. However, liability to advance tax commences from the financial year relevant to the assessment year in question, in this case being 2011-12. In the present case, the petitioner seeks credit in respect of the advance tax remitted during FY 2011-12 and 12- 13, relevant to AY 2012-13 and 13-14. Thus, there is a delay of one and two years respectively, as the amounts for which credit is sought ought to have been remitted in FY 2010-11, relevant to AY 2011-12. To this extent, the petitioner is liable to interest in terms of Section 234B. The impugned order rejecting the prayer for waiver of interest is set aside, to the extent as indicated above.
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2023 (2) TMI 354
Nature of expenses - disallowance of payment made towards co branding fees treating the same as capital expenditure - HELD THAT:- As perused the co branding agreement entered into by the assessee with AMW, wherein the assessee acquired non transferable limited right and license to use the brand name and logo of AMW on the packaging of licensed products manufactured by the assessee and the co-branded license produced products were meant for use as service fills and by way of retail sale for use in AMW vehicles only, which is evident from the preamble and Section 2 Section 5 Agreement. The co- branded Licensed Products could not be used by the Assessee to service its other clients. The sole and exclusive customer of the Assessee in respect of the co-branded Licensed Products was AMW itself for use as service fills or retail use. The agreement did not confer/vest in the Assessee s proprietary rights in the trademark/ license/ brand name, the Assessee was only granted an exclusive, non-transferable right and license to use the brand name of AMW on products manufactured by it. Assessee did not have absolute ownership of brand name of AMW and merely obtain right and license to use the said brand name on the products manufactured by the assessee. The use of the co brand license product was also only for one customer i.e. AMW itself. The Jurisdictional High Court in the case of Hilton Roulnds Ltd.[ 2018 (4) TMI 1485 - DELHI HIGH COURT] held that that the fundamental test to determine as to whether a particular mark has been licensed or assigned is to see if the licensor/ assignor has retained any rights in the mark. If rights are retained with the owner, usually it is a license and if no rights are retained by the owner, then it would usually be an assignment. A license, therefore, in the opinion of the Hon ble High Court, is nothing but a permissive use of the mark, whose permission, is revocable. A right to use is usually a license and not an assignment, except in certain circumstances. Thus Lower Authorities have committed an error in disallowing the expenditure claimed in respect of payment made by the assessee to AMW, accordingly the addition made by the Revenue Authorities is deleted and the Grounds of Appeal are allowed.
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2023 (2) TMI 353
Deduction u/s 80IB(10) - date of approval of original building plan - Claim denied as date of completion of the housing project is 23.03.2010, which is beyond the prescribed time lime for completion of the housing project under the provisions of section 80IB(10) - HELD THAT:- As onus of satisfying the conditions precedent for availing the benefit of deduction u/s 80IB always lie upon an assessee, who is claiming the benefit of deduction. In the present case, as stated by us supra, the assessee had failed to prove that the permissions for construction of the housing project were obtained on 12.09.2005 for the first time except harping on that the permissions for obtain for the first time only on 12.09.2005. As observed even the permissions obtained on 12.09.2005 contained a reference to the original permission obtained on 01.07.2003, which clearly establishes that the approvals for building permission were obtained for first time only on 01.07.2003. The reliance placed by the ld. CIT(A) on the decision of CIT vs. Vandana Properties,[ 2012 (4) TMI 54 - BOMBAY HIGH COURT] and the decision of Voora Properties (P) Ltd.[ 2015 (3) TMI 456 - MADRAS HIGH COURT] is misplaced, inasmuch as, the ratio laid down in those cases has no application to the facts of the present case. We are of the considered opinion that the assessee is not eligible for deduction of profits derived from execution of housing projects Ruby and Emerald u/s 80IB(10) of the Act. We consider unnecessary to delve into the issue of violation of other conditions for availing the benefit of deduction u/s 80IB(10) of the Act. Since, we held in foregoing paragraphs that the respondent-assessee is not eligible for benefit of deduction u/s 80IB(10) for failure of assessee to satisfy the condition precedent. Appeal filed by the Revenue stands allowed.
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2023 (2) TMI 352
Rectification of mistake u/s 154 - calculation of claim u/s 54EC deduction - HELD THAT:- Assessee has shown proper calculation of capital gains and claimed 54EC deduction, however, ADIT(CPC) has made adjustment under section 143(1) against which assessee filed rectification Application under section 154 of the Act. CPC passed rectification order without considering assessee s submission. CPC has not given any reasons in the rectification order. Assessee filed appeal before the ld.CIT(A) against the order under section 154 - CIT(A) has merely stated that the grounds of appeal raised by the assessee are beyond the scope of section 154 - CIT(A) failed to appreciate the facts narrated by the assessee in the submissions and documents filed by the assessee. In this case, all the facts are emanating from the Return of Income filed by the assessee. Hence, ld.CIT(A) has to consider Return of Income and the rectification application filed by the assessee. CIT(A) has not discussed these facts. CIT(A) has failed to pass a speaking order, therefore in the interest of justice we set-aside the order to the CIT(A) for denovo adjudication. CIT(A) shall give opportunity of being heard to the assessee before passing the order. Accordingly, grounds raised by the assessee are allowed for statistical purpose.
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2023 (2) TMI 351
Initiation of reassessment proceedings - Income not fully offered as income - Whether requisite condition of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, was complied with? - assessee recognized Revenue on sale of plots as against 10% of the amount realised from leasing of plots of land during the year which ought to have been considered, Similarly for Transfer Premium AO observed that the assessee recognized only Part for taxation, which led to escapement of income and for item Rent accrued which in the opinion of the AO ought to have been offered at a higher level - HELD THAT:- There is nothing in the reasons to indicate that the assessee did not disclose fully and truly all material facts necessary for assessment on this count. Such details were already before the AO when the return was filed and the original assessment u/s.143(3) was completed. At that time, the AO accepted such income after due verification. However, later on, he realised that the assessee had recorded income at a lower level which amounted to escapement of income. In our considered opinion, it is only change of opinion of the AO de hors any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Depreciation of leased properties - difference between finance and operating leasing with reference to the accounting standards - AO observed in the reasons that it was a case of under-reporting of income by claiming excess depreciation - HELD THAT:- As can be seen from the assessee s Income and Expenditure account that the total amount of depreciation has been reflected on the face of it at Rs.8.74 crore. Such depreciation includes depreciation of leased properties amounting to Rs.7.15 crore. Here again, the AO changed his opinion from the original assessment in allowing deduction for the depreciation as claimed to now pointing out that the claim of depreciation was not permissible. There is no reference to any tangible material taken note of by the AO in concluding that the income escaped assessment. AO has nowhere brought out as to how the claim of depreciation at higher level in the original assessment proceedings can be construed as failure of the assessee to disclose fully and truly all facts necessary for assessment. It is only change of the opinion by the AO, which in our considered opinion, cannot lead to initiation of reassessment proceedings after a period of four years from the end of the relevant assessment year. Capital receipts not credited to the Income and Expenditure account - assessee claimed entire amount as exempt u/s.11 - assessee changed the accounting system from Cash system to Accrual method due to which proper income was not reflected - HELD THAT:- By no standard, claim by the assessee of certain amounts as capital receipt in the annual accounts, can be construed as failure of the assessee to disclose fully and truly all material facts necessary for assessment, more so, when the case of the AO in the reasons is based on the assessee claiming exemption u/s.11, which is actually not the position. The next connecting point about change of method as a reason for reassessment has also no legs to stand. Income and Expenditure account was drawn as per the changed method of accounting. It was on that basis only that the AO completed the assessment u/s.143(3). Having done so, the AO cannot turn around to claim that the change of method by the assessee was not bona fide, more so, when all such facts were open before him during the course of original assessment proceedings. This point again does not fall in the realm of failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. The above discussion manifests that the initiation of reassessment proceedings was founded on certain factors, which the AO was not entitled to proceed, because he had already completed the assessment u/s.143(3) and there was nothing to show on these issues that the assessee failed to disclose fully and truly all material facts necessary for assessment. Thus we hold that the reassessment was wrongly initiated. - Decided in favour of assessee.
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2023 (2) TMI 350
Order passed u/s 154 r.w.s. 143(3) enhanced the disallowance u/s 14A - HELD THAT:- The issue raised in the present appeal does no emanate from the order passed by the Assessing Officer u/s 154 dated 03.12.2019. Admittedly, the appellant had not challenged before us the assessment order passed u/s 143(3) dated 28.08.2019. The impugned order before us is that the order passed u/s 154, which was rightly dismissed by the NFAC. Therefore, the grounds of appeal filed by the assessee stand dismissed.
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2023 (2) TMI 349
Deduction u/s 54B - claim denied as impugned land was not used for agricultural purpose - part of the paper book that land is marked as पडत, it means it was not used for agricultural purposes - HELD THAT:- As per The Maharashtra Land Revenue Record of Rights and Registers (Preparation and Maintenance) Rules, 1971, the Talathi Visits the field and then makes entries of the crops grown. In the case under consideration, the talathi has entered the land as पडत . The records maintained by talathi are authentic. The assessee has also filed copy of letter issued by the purchaser of the land, however, it is a letter issued by the person who have transactions with the assessee. The said self- professing letter does not have any evidentiary value in the presence of Land Revenue Record maintained by talathi. However, the said letter does not establish that the impugned land was used for agricultural purpose by the assessee or his family members. Hon ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar Company [ 2018 (7) TMI 1826 - SUPREME COURT] held that the exemption provisions shall be interpreted strictly. The section 54B gives deduction to the assessee which is a kind of exemption provision and therefore such provisions has to be interpreted strictly. Since the land at Survey No.60/3, Village Mashrool, District Nashik was not used for agricultural purposes in the preceding two years from the date of sale, the assessee is not eligible for claim of deduction under section 54B of the Act. Accordingly, the Ground raised by assessee are dismissed.
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2023 (2) TMI 348
Transfer Pricing Adjustment - Import made by the assessee - DRP directed Ld. TPO to adopt the middle value of the price band in FMB [Fertilizer Market Bulletin] price list to iron out the various factors like insurances, extended credit facility etc. - HELD THAT:- The import and export transactions have been benchmarked on transaction-to-transaction basis on the basis of rates published in FMB bulletin. The price quoted therein gives a broad price range and accordingly, the middle price has been accepted while working out TP adjustments. Another fact is that the published prices do not provide any information about quantities shipped at those rates. Assessee sought examination of additional evidences which were not admitted by Ld. DRP. A plea has been raised by Ld. AR to admit these evidences since the same is stated to have material bearing on the determination of ALP - we direct Ld. TPO / AO to admit these additional evidences and rework the TP adjustments after re-examination of the same. AR has pleaded for grant of safe harbor / tolerance range which may also be considered by Ld. TPO in accordance with law. The assessee is directed to provide requisite information and evidences in support of its case. The corresponding grounds stand allowed for statistical purposes. Disallowance u/s 14A - assessee earned exempt dividend income and offered suo moto disallowance - AO, applying Rule 8D, computed aggregate disallowance which was direct expenses disallowance u/r 8D(2)(i), interest disallowance u/r 8D(2)(ii) and indirect expenses disallowance u/r 8D(2)(iii) - HELD THAT:- The limited submissions of Ld. AR are that own funds far exceed the investments made by the assessee and therefore, a presumption would arise that the investments were funded out of own funds. Further, majority of the investments are old investments for which interest disallowance is not justified. Lastly, it is the submission of Ld. AR that only exempt yielding investments are to be considered while working out the disallowance. We find that both the pleas are duly supported by binding judicial precedents. Therefore, we direct Ld. AO to examine whether the own funds exceed the investments made by the assessee and the investments are old investments only. If so, interest disallowance would not be justified. Further, while working out the disallowance, only exempt income yielding investments are to be considered by Ld. AO. We order so. This ground stand allowed for statistical purposes. Disallowance of interest converted into loans - outstanding interest on loan has been disallowed in earlier years u/s 43B since the same was converted into loans and there was no actual payment - HELD THAT:- The assesses has subsequently settled the loans and make a claim for deduction of interest on the ground that the same has actually been paid. However, as rightly noted by lower authorities, the assessee is not in possession of necessary evidences to support the same and not able to provide even the basic working of bifurcation of interest and principal component. No such evidences or computations have been placed before us. We also concur with the observations of Ld. AO that there could be innumerable variations in repayment arrangement / schedules entered into by the lender and borrowers. It may, therefore be not possible to visualize all kinds of arrangement which may be entered into by lenders and borrowers in this regard. The fundamental principle would remain that once an amount has been determined as interest payable to banks of financial institutions, any subsequent change of nomenclatures of interest would not affect its allowability and deduction in terms of Sec.43B. Therefore, by confirming this disallowance, we dismiss the grounds raised by the assessee, in this regard.
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2023 (2) TMI 347
Computation of LTCG - determine the cost of construction of the villa - reference to DVO - assessee was unable to furnish any documentary evidence in support of her claim that she had incurred an expenditure on cost of construction (indexed to cost of improvement claimed by the assessee) - AO reworked the cost of improvement by adopting prevailing guidance value rate (construction of villa between AY 2009-10 and AY 2012-13) - HELD THAT:- AO had adopted the guidance value as cost of construction primarily for the reason that the valuation report submitted by the assessee is not backed by any evidence/proof of expenditure incurred. The assessee, however, submitted that the details called for were duly submitted before the AO and the AO is not justified in stating the assessee has not provided details in support of the cost incurred for construction of the villa. On perusal of the proof submitted as regards to the cost of construction/ improvement of property, we find the assessee has filed before us the statement of cost of construction, certain bills towards expenses/purchases, details of payments made to the builder/contractor, etc. We find confirmation of such payments from builder/contractor and the architect are not on record. The paper book submitted before the Tribunal is not certified that the material produced before the Tribunal has been placed before the AO and the DRP. There is no clarity whether the evidences that are produced before the Tribunal has been on the record before the AO and the DRP. Hence, in the interest of justice and equity we are of the view that the matter needs fresh examination by the AO. Accordingly the issues raised in this appeal are restored to the file of the AO. AO is directed to adopt the actual cost of construction in respect of the villa. The assessee shall provide necessary proof such as confirmation from the builder/architect with regard to the payments received from the assessee, the invoice incurred on cost of construction, etc. In the event the assessee is not able to prove the actual cost of construction AO shall be at liberty to refer the matter to the Valuation Officer to determine the cost of construction of the villa (to rebut the valuation report submitted by the assessee). Appeal filed by the assessee is allowed for statistical purposes.
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2023 (2) TMI 346
Unexplained cash credit u/s.68 - Unexplained entry in the books of accounts brought to tax - double taxation - taxing the source of investment and application of investment both - HELD THAT:- In Assessment Year 2012-13, the assessee had shown a sum as agricultural income and the advance received in respect of lease of lands does not appear in the balance sheet as on 31.3.2012. It is thus clear that what was shown as advance in the balance sheet in Assessment Year 2011-12 as on 31.3.2011 a part of it was shown as agricultural income by the assessee in Assessment Year 2012-13. Therefore, the contention of the assessee that the sum declared as agricultural income was on the opening balance of 31.03.2011 of leased lands received in respect of Manepalli lands is correct. The contention of the assessee that the same income which was taxed in Assessment Year 2011-12 against sought to be taxed in Assessment Year 2012-13 is factually found to be correct. The plea of the learned counsel for the Assessee rest on the theory of Telescoping. If income is available to an Assessee, then that income can be explained as a source for an item of investment or expenditure that the Assessee is unable to explain, provided the income was available to the Assessee when the investment or expenditure is made/incurred. The idea is ultimately tax is levied either only on the income or only on its application. The theory operates on the basic presumption that when there are undisclosed income and also certain undisclosed investments, then it could be reasonably presumed that the undisclosed investments have been sourced out of the undisclosed income, so that only the income may be taxed or only the investment may be taxed and not both, in the hands of the assessee under the provisions of the Act. When an income is taxed / addition is made to taxable income in an earlier year, the assessee may claim that the income arising in subsequent year / subsequent period is sourced out of the income taxed earlier. AO and the CIT(A) have proceeded on the presumption that the assessee is claiming credit on the agricultural income declared in Assessment Year 2011-12 is factually incorrect. The credit is claimed only for the advance shown in the balance sheet that was treated as unexplained credit under section 68 - Decided in favour of assessee.
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2023 (2) TMI 345
Addition u/s 69A - entries in the cash book corresponding to receipts surrendered during the course of survey - statement recorded u/s 131 assessee submitted that the entries reflected therein pertain to gym receipts which have been received in advance from the respective persons, however to buy piece of mind and avoid litigation, he surrendered the receipts - HELD THAT:- The factum of nature of these receipts being received by the assessee from his gym activities are not in dispute. In the return of income filed u/s 44AD, the assessee has disclosed the receipts from the gym activities which has been accepted by the Revenue and are not in dispute. Assessee has submitted a cash book containing date-wise receipts from gym activities and on perusal thereof, we find that total receipts reflected therein amounts to Rs 16,00,600/- and individual receipts totaling Rs 3,00,000/- have been included therein. It is true that the assessee was not maintaining regular books of accounts but at the same time, as evident from the statement recorded during the course of survey as well, the assessee was maintaining receipts book/bills in respect of his gym activities. Where the entries corresponding to the entries in the receipts books are reflected in the cash book and are accepted by the Revenue, I see no justifiable reason to not accept the entries in the cash book corresponding to receipts surrendered during the course of survey. I therefore find that it is a case where the assessee has surrendered business receipts amounting to Rs 3,00,000/- during the course of survey and the said receipts have subsequently been offered as part of the total business receipts in the return of income so filed by the assessee u/s 44AD. In the result, the addition of Rs 3,00,000/- so made and upheld by the ld CIT(A) is hereby directed to be deleted. Unexplained advances - during the course of survey operations at the assessee s premises, a pocket book containing certain entries were found containing name of certain persons and the corresponding amount - assessee submitted that the entries reflected therein pertain to friendly loans given by him to certain persons out of his undisclosed income and to buy piece of mind and avoid litigation and he surrendered the amount for the purposes of taxation - HELD THAT:- As noted that the assessee has shown these loans transactions against individual name and corresponding amount at the beginning of the year and there are no fresh loan transactions shown during the year and then, against four persons, there are repayment of loans by cheque - The statement made during the course of survey is relevant and at the same time, where the assessee is able to demonstrate that the transactions actually pertain to previous year and there are infact repayments rather than fresh loan transactions during the year, it is essential that the said submissions be considered and examined which has not happened in the instant case. The factum of repayment through cheques could easily be verified from the bank statements. Basis material available on record, find that the assessee has reasonably demonstrated that there are no fresh loan transactions during the year and considering the same, the addition so sustained by the ld CIT(A) is hereby directed to be deleted. Unexplained advances to doubtful persons - HELD THAT:- It is true that the assessee was not maintaining regular books of accounts but at the same time, as evident from the statement recorded during the course of survey as well, the assessee was maintaining receipts book/bills in respect of his business activities and further, it is also a fact that the assessee has disclosed these receipts as part of service tax/GST returns. Where the entries, corresponding to business receipts in the receipts books, are reflected in the cash book and the same are accepted by the Revenue, see no justifiable reason to not accept the entries in the cash book corresponding to advances made out of said business receipts. We find that it is a case where the assessee has offered business receipts in his return of income which is sufficient to make business advances and thus, no separate addition is called for. In the result, the addition so made and upheld by the ld CIT(A) is hereby directed to be deleted. Appeal of the assessee is allowed.
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2023 (2) TMI 344
Exemption u/s. 54B denied - Assessee did not file return of income within due date specified as per the amendment in sixth Proviso of section 139(1) - HELD THAT:- As observed on the amendment in section 139(1) of sixth Proviso, section 54, section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB were inserted by the Finance Act, 2019 which is effective from 01.04.2020, but the impugned case on hand is related to the AY 2006-07. It indicates that the exemption u/s 54B can be claimed without filling of return of income , now it has been amended by the Finance Act. 2019. The arguments advanced by the ld. DR. will not support the case of the revenue regarding compulsory filing return of income for getting exemption u/s. 54B of the I.T.Act r.w.s. 80C 139(1). Issue is remitted back to the file of the AO for the purpose of verification whether the assessee has fulfilled the conditions of section 54B of the I.T. Act for getting exemption or not and the assessee is directed to provide necessary documents for substantiating his claim before the AO and further directed not to seek unnecessary adjournments for early disposal of case. The AO shall give three effective opportunities to the assessee and decide the issue as per law. Appeal of the assessee is allowed for statistical purposes.
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2023 (2) TMI 343
Exemption u/s 11 - cancel the registration of trust or institution granted u/s 12A - reasons assigned for cancellation of registration are appellant society has been indulging in collection of capitation fees AND capitation fees so collected was siphoned off by the trustees for their personal benefits - whether or not the Ld. PCIT (Central), Pune is justified in cancelling the registration u/s 12A w.e.f. financial year 2007-08? - HELD THAT:- In view of concurrent findings of Tribunal and CIT(A), the Ld. PCIT was justified in reaching a conclusion that the activities of the appellant trust are not genuine and are not being carried on in accordance with the objects for which it was established. Therefore, we are of the considered opinion that the Ld. PCIT had rightly cancelled the registration of appellant trust. Whether or not Ld. PCIT was justified in cancelling the registration of trust with retrospective effect from financial year 2007-08? - In the present case, Hon ble Bombay High Court in Writ Petition filed by the appellant challenging the show cause notice for cancellation of registration held that the contents of order dated 09.10.2007 passed by the Commissioner cancelling registration shall be treated as show cause notice to the appellant as extracted supra and this finding had not been reversed till date. In the interest of judicial discipline, the ld. PCIT is bound to obey the directions of Hon ble High Court and rightly cancelled the registration w.e.f. financial year 2007-08. There is yet another reason as to why we are upholding the validity of order with retrospective effect, the appellant right from the initial date of show cause notice issued on 11.03.2011 had been representing before the learned Commissioner that the proceedings be kept in abeyance till the disposal of Writ Petition by the Hon ble Bombay High Court and SLP by the Hon'ble Supreme Court. Thus, the appellant by his acts and conduct had acquiesced to the delay in completion of proceedings. On perusal of order sheet of file of learned PCIT, it would be apparent that proceedings are continuous, merely because on change of incumbent, fresh show cause notice was issued, it cannot be construed to mean that it is fresh show cause notice especially in view of the fact that there is no evidence on record to show that earlier show cause notice was dropped. Thus, the appellant himself is responsible for delay in culminating the proceedings into the final order. Appeal filed by the assessee is dismissed.
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2023 (2) TMI 342
Taxing of foreign income as taxable in India - Income earned from Malaysia and Sri Lanka - AO was of the view that in case of a resident person as per the provision of Income Tax Act, global income is taxable in India - Benefit of Double Taxation Avoidance Agreement (DTAA) entered into by India with Malaysia and Sri Lanka - HELD THAT:- We following the reasoning of the co-ordinate Bench while deciding the appeal in assessee s own case for A.Y. 2014-15 [ 2022 (9) TMI 1414 - ITAT DELHI] and for similar reasons hold that A.O. was not justified in including the income earned in Malaysia and Sri Lanka as income of the assessee. We therefore direct the setting aside of the addition made by A.O and thus this ground of the assessee is allowed and Revenue is dismissed. Disallowance u/s. 14A r.w.r 8D - HELD THAT:- We find identical issue arose before the co-ordinate bench of Tribunal in assessee s own case for A.Y. 2014-15 [ 2022 (9) TMI 1414 - ITAT DELHI] wherein held the average investments, the disallowance made by the Revenue u/r 8D(2)(iii) by considering 0.5% of the average investment is hereby sustained. Addition on account of advances written off - HELD THAT:- On the ground that, no details regarding advances written off has been filed by the assessee before the AO. CIT(A) held that the expenditure was already allowed in the year in which the material was purchased and the same cannot be allowed twice when the same has been returned by the sub-contractor. Ongoing through the facts, we decline to interfere with the ratio of the ld. CIT(A). The appeal of the assessee on this ground is dismissed. Before us distinguishing feature in the facts of the present case at that of A.Y. 2014-15 has been pointed out by learned AR. In such a situation we find no reason to interfere with the order of Ld. CIT(A) on this ground. Thus this ground of the assessee is dismissed. Deduction u/s. 80-IA - CIT(A) held Deduction to be allowable to the assessee - HELD THAT:- We find that identical issue arose in assessee s own case for A.Y. 2014-15 and the co-ordinate bench of the Tribunal in [ 2022 (9) TMI 1414 - ITAT DELHI] has decided the issue in favour of the assessee and held appellant is entitled to claim deduction 80IA, which was wrongly denied - This ground of the Revenue is dismissed. Addition on account of provision for maintenance - CIT- A deleted the addition - HELD THAT:- We find that on identical issue the co-ordinate Bench of Tribunal in A.Y. 2014-15 [ 2022 (9) TMI 1414 - ITAT DELHI] has decided the issue stating that assessee has been providing for expenses to b e incurred on demobilization, maintenance and other expenses since by inception of the Company. The same has been allowed by the Department all along excep t in the Assessment Years 1985-86, 1995-96 2001-02, 2002-03, 2003-04, 2004- 05 and 2005-06. In these years, the A.O. disallowed the aforesaid provisions. Further, in appeal before the Ld. C IT(A), in the assessment year 1985-86, 1995-96 and 2001-02 and 2002-03, these were allowed on the basis of the aforesaid judicial analysis. Since, the decision of the ld. CIT(A) is based on the decision of the earlier years which stands upheld, we decline to interfere with the order of the ld. CIT(A) on this issue - case in the year under consideration and that of earlier years nor has placed any material on the record demonstrate that the order of the coordinate bench in assessee s own case for earlier years has been set aside/overruled/stayed by higher judicial forum. We therefore find no reason to interfere with the order of Ld. CIT(A) - Decided against revenue.
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2023 (2) TMI 341
Additional depreciation u/s 32(1)(iia) - assessee s claim for 50% initial depreciation u/s 32(1)(iia) of the Act amounting to Rs.14,93,45,096/- in respect of new plant and machinery purchased and installed in the preceding year but put to use for a period of less than 180 days in that year - HELD THAT:- As decided in assessee own case [ 2017 (9) TMI 962 - ITAT KOLKATA] assessee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed. TP adjustment in relation to specified domestic transactions of transfer of power for captive consumption by eligible units to non-eligible units - Deduction u/s 80IA in respect of thermal power plants for generating electricity - profits and gains of such eligible business shall be computed as if the transfer has been made at Arm s Length Price ('ALP ) - ALP as mandated in Section 80IA of the Act, the assessee was show-caused as to why the same price computed by the assessee not been rejected as it cannot supply power at that rate in open market being a manufacturer and not a distributor - HELD THAT:- As decided in M/s. Dhunseri Ventures Ltd. [ 2022 (8) TMI 1342 - ITAT KOLKATA] no force in the contentions of the Id DR that rate at which the power was sold to unrelated parties by the CPP is the ALP. We also note that decision of the Calcutta High court in the case of CIT Vs ITC [ 2015 (7) TMI 450 - CALCUTTA HIGH COURT] which was relied by the TPO/AO and the functional dissimilarity between CPPs and SEB have been considered by the coordinate bench of the tribunal in the case of Star Paper Mills Ltd [ 2021 (11) TMI 1 - ITAT KOLKATA] . Therefore, we are inclined to uphold the order of Ld. CIT(A) by holding that the ALC at which the power is procured by non-eligible units from SEB is the most appropriate ALP to bench mark the specified domestic transactions and accordingly the order passed by Ld. CIT(A) is upheld by dismissing the revenue's appeal on this issue. The grounds of appeal pertaining to this issue are dismissed. Nature of receipts - compensation paid for obtaining limestone connected to mining activity - HELD THAT:- We find that this Tribunal in assessee s own case for AY 2011-12 2012-13 [ 2022 (10) TMI 1151 - ITAT KOLKATA] as held payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature. Treating of industrial promotion assistance from the State Government as capital receipt - HELD THAT:- As decided in assessee own case subsidy in question is a capital receipt and not chargeable to tax. Claim of interest subsidy from the State Government as a capital receipt - HELD THAT:- As decided in assessee own case AY 2010-11 [ 2017 (9) TMI 962 - ITAT KOLKATA] interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed. Disallowance u/s 14A read with Rule 8D - As per assessee AO should have accepted the disallowance offered by the assessee u/s 14A of the Act and he erred in invoking and applying Rule 8D - HELD THAT:- We find that this Tribunal in assessee s own case for AY 2011-12 2012-13 [ 2022 (10) TMI 1151 - ITAT KOLKATA] dealt with this issue of disallowance u/s 14A of the Act and decided in assessee s favour consider all investments (excluding investments in subsidiary companies) which yielded dividend income to the assessee for computing disallowance u/s 14A of the Act r.w. Rule 8D of the Rules. MAT computation - whether subsidy/incentives being capital receipts needs to be excluded from the book profit u/s 115JB of the Act? - HELD THAT:- Since the issue stands squarely covered by the Hon'ble Jurisdictional High Court in the case of Ankit Metal and Power Limited [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] , we fail to find any infirmity in the finding of ld. CIT(A) holding that the subsidy/incentive received by the assessee which have been held to be capital receipts are to be excluded from the book profit u/s 115JB. Addition of provision for sick leave, which was written back and credited to P L A/c, while calculating book profit u/s 115JB - HELD THAT:- The appellant identified transitional liability on account of provision of sick leave but in terms of Accounting Standards-2015 (Revised) the said provision was not debited to profit and loss account but directly adjusted against the balance in general reserve. Thus, the claim was neither debited to profit and loss account nor claimed as deduction from the book profit. Under these facts and circumstances, we hold that the claim of the assessee of excluding the provision for sick leave written back was justified. Thus, no interference is called for in the finding of ld. CIT(A). Thus, ground no. 8 raised by the Revenue for AY 2013-14 is dismissed. Upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules - HELD THAT:- We find that this Tribunal in assessee s own case for AY 2011-12 2012-13 dealt with this issue and decided in assessee s favour [ 2022 (10) TMI 1151 - ITAT KOLKATA] wherein we fail to find any infirmity in the finding of ld. CIT(A) in deleting upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules. Education cess being claimed as an expenditure u/s 37(1) - HELD THAT:- We fail to find any merit in this ground raised by the assessee, since the claim of deduction in the nature of education cess has been decided against the assessee by this Tribunal in the case of M/s. Kanoria Chemicals Industries Ltd. [ 2021 (10) TMI 1153 - ITAT KOLKATA] and also in light of the retrospective amendment made by the Finance Act, 2022 inserting Explanation 3 to Section 40 of the Act as per which education cess cannot be claimed as expenditure. Therefore, common ground no. 1 raised by the assessee for AY 2013-14 2014-15 is dismissed. Deduction of provision made for leave encashment and the allowability of the deduction u/s 43B(f) of the Act for the amount actually paid - HELD THAT:- As respectfully following the finding of the Tribunal applying the ratios laid down by Hon'ble Supreme Court of India in the case of Exide Industries Limited [ 2020 (4) TMI 792 - SUPREME COURT] we are of the considered view that the issue needs to be remitted back to the file of ld. AO who shall allow the claim of leave encashment actually paid by the assessee during the AY 2013-14 2014-15.
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2023 (2) TMI 340
Assessment u/s 153A - Addition u/s 69 - assessee contended that the addition have been made by the Ld. AO without there being any material found as a result of search conducted on the assessee and some material of alleged survey made on M/s. Vatika Prop. Build Pvt. Ltd. has been relied - whether CIT(A) has failed to take into consideration publicly available information to consider that there was no ambiguity with regard to identity of Vatika in reference to the information seized and the name present assessee? - HELD THAT:- On the basis of admitted facts it can be concluded that there is no dispute to the fact that no incriminating material was discovered or recovered in search proceedings upon the assessee. Survey on M/s Vatika Propbuild Pvt. Ltd. has no relevance as there is no material on record to show how the appellant is connected with this M/s Vatika Propbuild Pvt. Ltd. Public domain information is nothing unless brought on record as evidence and confronted to assessee. It can be noted that Ld. AO has primarily relied the digital information retrieved by the Investigation Wing, Mumbai and allegedly seized from the office Chamber of Mr. Ashok Sharma, the C.F.O. of Indiabulls Group at the time of search on the Indiabulls Group on 12.07.2016 and 14.07.2016. In RRJ Securities Pvt. Ltd. [ 2015 (3) TMI 410 - DELHI HIGH COURT] Hon ble Delhi High Court has held that data in hard disk found at the premises of a chartered accountant on basis of which accounts are prepared and return are filed cannot be considered as incriminating material. There is force in the contention of assessee that revenue cannot take a plea of lack of exercise of plenary powers by the ld. CIT(A) rather what transpires from the order of Ld. AO and ld. CIT(A) is that where Ld. AO had nearly approached the issue on the basis of presumptions. CIT(A) has taken into consideration the facts before it to make aforesaid conclusions. The ld. CIT(A) had forwarded the detailed written submissions of the assessee to ld. AO for comments and after receiving the remand report had disposed of the matter. Ld. CIT(A) had specifically authorized, the Ld. AO u/s 250(4) of the Act, to conduct necessary inquiries. It appears, Ld. AO made no efforts. The matter of fact remains that Ld. AO himself did not have with him any seized material and what he had was merely information. The electronic evidences allegedly recovered from the CFO of Indiabulls Group had never reached the hands of the ld. AO. The co-terminus power of Ld. CIT(A) to put to the assessee can only stand to the material available on record. Had there been some material on record, he would have supplied the same to the assessee to counter the prejudice claimed by the assessee of not being provided the material relied against the assessee. But there was no material to do that. Consequently, there is no force in the grounds raised - The appeal of revenue is dismissed.
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2023 (2) TMI 339
Exemption u/s 11 - Scope of newly inserted section 11(6) - Depreciation on assets - Double benefit - whether insertion of section 11(6) brought into the Act with effective from 01.04.2015 is ' prospective in nature and therefore shall not apply on the case of the present assessment year i.e. A.Y. 2014-15 ? - HELD THAT:- AO could not assert anything with regard to fact that revenue s appeal for assessment year 2010-11 and 2011-12 stand dismissed [ 2018 (6) TMI 1827 - ITAT DELHI] and for assessment year 2012-13 [ 2021 (5) TMI 358 - ITAT DELHI] Hon ble Supreme Court of India in CIT vs. Rajasthan and Gujarati Charitable Foundation, Pune [ 2017 (12) TMI 1067 - SUPREME COURT] has settled the issue and specifically observing and taking into cognizance the fact that amendment brought in Section 11(6) of the Act vide Finance Act, no. 2 / 2014 is prospective in nature, from assessment year 2015-1,6 while the present year under consideration is A.Y. 2014-15. Therefore ground decided against the Revenue.
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2023 (2) TMI 338
Income deemed to accrue or arise in India - Royalty receipts - Assessee company has licensed software to Reliance Jio under two separate agreements and the ld AO had considered that the receipts to be taxed as royalty on the basis that the transaction squarely falls within the provisions of section 9(1)(vi) of the Act and also under the relevant Article 12 of India-Singapore Treaty - HELD THAT:- Assessee has not agreed for absolute transfer or assignment, sub-license or lease of the rights to the Reliance Jio as 3rd Party but rather the right has been restricted by the Clause 9(a) as it is an exception clause - it is only in regard to the business operation related to providing services to Reliance Jio assignment, lease, transfer or sub-license to a 3rd party is permitted. That only indicates that when the 3rd party is providing any service by its business operations to Reliance Jio only, in those circumstances the said 3rd party may be allowed to use the software license or documents by the buyer, reliance Jio. Such transfer of any interest by assignment, lease, transfer or sub-license to 3rd party is not for the own benefit of the 3rd party or generate revenue from independent business operations in which Reliance Jio would have no interest. Thus the first reason cited by the ld CIT(A) is not sustainable. Coming to the second reason it can be observed that the ld CIT(A) himself has found that right to decomplile the software has been given for a limited extent. Clause 9(b) again is part of exception clause and infact restricts decompilation, re-assemble or reverse engineering of the software and the clause mentions that it is only when the law, if any, mandates such decompilation the same would be permitted under the agreement in favour of the Reliance Jio. Thus, it is not under the agreement entered between the parties, the right to decompile has been allowed but only as exception, where the law of the land would mandate or to say casts duty for such decompilation, then the Reliance Jio has been permitted to do the same. Third reason cited by the ld CIT(A) is not sustainable as the provision made of source code escrow arrangement is only to deal with the contingency so that the buyer‟s business continues during the term of agreement of five years if likely to be effected by uncertainty like Bankruptcy etc of the assessee. Escrow arrangement is merely remedial measures to give continuity to the agreement during its life and cannot be said to be arrangement to part of the rights in favour of the buyer to use the license software to support any 3rd party processing. Fourth reason, CIT(A) has failed to appreciate that in the case in hand, when the agreement specifically mentions that the Assessee has given to his buyer non-exclusive and non transferable but enterprise wide unlimited use rights in the software, then reproduction for multiple end users, within the association of buyers cannot be construe to be conferring proprietary interest on the licensee, by parting with any copyright in the software. It is merely for the convenience and to avoid multiple transactions and consequent agreement for every end user of the Reliance Jio. Reason number five, it can be observed that reproduction of the software in unlimited CPUs cannot be considered to be a license in terms of section 30 of Copyright Act. The concept of end user License Agreement (EULA) has been examined extensively by the Hon'ble Supreme Court in case of Engineering Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] and held that it is not agreement under which the vendor part of any interest relatable to any right mentioned in section 14A and 14B of the Copyright Act. The CPUs being used by Reliance Jio‟s employees, consultants and implementers of the software, would certainly require installation by reproductions, when the enterprise wide unlimited use rights in the software are given. As in the case of the buyer Reliance Jio, the Mumbai Bench [ 2021 (3) TMI 1408 - ITAT MUMBAI] has upheld the order of the ld CIT(A) in holding that no tax is deductible of the payment/ credit made by Reliance Jio to present Assessee, SDL, for the software. The coordinate bench has relied on the judgment of the Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd [ 2021 (3) TMI 138 - SUPREME COURT] - Impliedly, not treating the receipts of the present appellant company as Royalty and consequently not chargeable to tax in India. Decided in favour of assessee.
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2023 (2) TMI 337
Reopening of assessment u/s 147 - income escaped amount to be reopened for reassessment - information received from DDIT, Investigation Unit-2, Rajkot that the assessee has paid an amount for Life Insurance Policy assigned to the assessee, which the assessee has not declared in her Return of Income - HELD THAT:- Assessee explained that the premium amount for Life Insurance Policy was not Rs. 9,99,000/- but only Rs. 99,900/-, which is a mistake and produced a notarized declaration by the Sales Manager of Bajaj Alliance Life Insurance Company quoting that the premium amount wrongly as Rs. 9,99,000/- instead of Rs. 99,900/- which was a typing mistake. Life Insurance Premium is not Rs. 9,99,000/- but it is Rs. 99,900/- only. As per Section 149(1)(b) of the Act, which prescribes the income escaped amount is Rupees one lakh or more is to be reopened for reassessment. Thus, we find that the initiation of reassessment proceedings itself is against the provisions of 149(1)(b) of the Act and invalid in law. Therefore the same is liable to be quashed. Thus the grounds raised by the Assessee is hereby allowed. Penalty levied u/s. 272A(1)(c) - HELD THAT:- Assessee s taxable income being less than the taxable limit prescribed under the Act, we have no hesitation in deleting the penalty levied u/s. 272A(1)(c) of the Act. Thus the grounds raised by the Assessee is hereby allowed.
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2023 (2) TMI 336
Rectification of mistake u/s 154 - Addition towards income from profession of the assessee - assessee had indeed made punching error only while filling the income tax return by adding one more 0 (Zero) - assessee pleaded that while filling up the income tax return, the assessee had committed the punching error by mentioning the professional fee of Rs.81,00,051/- erroneously as against the actual fee of Rs.8,10,051/- - HELD THAT:- Since the assessee had filed its original return of income belatedly on 13/02/2016, the assessee was prevented from filing the revised return. Hence, the assessee filed a rectification petition u/s.154 of the Act before the ld. CPC which was not accepted. We have gone through the bank account summary of the assessee for the whole year which are enclosed wherein it is evident that assessee has actually received professional income from Power Tech Services only to the tune of Rs.7,62,444/- net of TDS. Hence, the addition that has been made due to punching error had resulted in a scenario of assessee getting taxed on an income which he had never earned. Assessee has also filed an affidavit in this regard admitting the punching error that had crept in while filling the income tax return. We find under similar circumstances, the Co-ordinate Bench of this Tribunal had an occasion to consider the negligible error that had crept in, in the electronic filing of returns in the case of Shrikant Real Estates (P) Ltd. [ 2012 (10) TMI 854 - ITAT MUMBAI ] - Thus we direct the ld. AO to delete the addition made in the sum due to punching error. Accordingly, the grounds raised by the assessee are allowed.
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2023 (2) TMI 335
Exemption u/s 11 - registration cancelled by the CIT u/s 12AA - assessee is established under the Society Registration Act, 1860 and it was granted registration u/s 12A(a) - CIT had withdrawn the registration u/s 12AA w.e.f. assessment year 2004-05 - HELD THAT:- The registration was restored by the order of the ITAT, Amritsar Bench. After the order of the ITAT, the assessee is registered u/s 12AA and eligible to claim deduction u/s 11 r.w.s. 12A of the Act. The assessee was eligible for the benefit of section 11 of the Act. In no reason, the benefit can be denied by the department. CIT(A) in the order has observed that the revenue appeal is pending before the Hon ble Punjab Haryana High Court against the order of the ITAT, Amritsar. But till the revenue has not able to submit any outcomeof the appeal, filed before the Hon ble High Court. We fully relied on the order of our Coordinate bench [ 2016 (3) TMI 1447 - ITAT AMRITSAR] . The assessee is eligible to get benefit of Section 11 - CIT-Dr was unable to bring any contrary fact against the submission of the assessee. In our considered view the order of the ld. CIT(A) is quashed. The ground of the appeal of assessee is allowed. Depreciation disallowance and hoc disallowance of entertainment expenses - HELD THAT:- Going by the nature of expenses such as claim of depreciation, entertainment expenses, it is prima facie not very clear whether these expenses can be claimed as revenues expenses and allowable under sections 30 to 37 of the Act in relation to Trust, registered U/s 12AA of the Act. Since there is absence of any findings of the lower authorities, we deem it appropriate to set-aside the same to the file of the ld. CIT(A) who shall examine the aforesaid contentions so raised besides examining the matter from the perspective of allowability in case of Trust and genuineness of expenses. Further, the assessee should get reasonable opportunity of hearing for filing the evidence in relation to its claim. In the result, appeal allowed for statistical purposes.
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2023 (2) TMI 334
Revision u/s 263 - assessee had received an amount from the investment in property and the same is required to be taxed in the year of receipt i.e. A.Y. 2014-15 - Whether amount should be taxable in assessment year 2013-14 or in assessment year 2014-15, and tax rate in both the assessment years are same, whether there is loss to the Revenue? - HELD THAT:- In order to invoke the jurisdiction under section 263 of the Act, two conditions should be satisfied viz: (1) order passed by the Assessing Officer should be erroneous and (2) prejudicial to the interest of Revenue. We note that Assessing Officer taxed the disputed amount of Rs.9,00,000/- in assessment year 2013-14 instead of assessment year 2014-15, therefore order passed by the Assessing Officer is erroneous - since in both the assessment years 2013-14 and 2014-15 tax rate was same, therefore order passed by the AO should not be prejudicial to the interest of Revenue, (as there is no loss to the Revenue). Hence, one of the conditions (prejudicial to the interest of Revenue) is not getting satisfied in the assessee`s case under consideration. Therefore, we note that the issue raised by Ld.PCIT is revenue neutral, as it does give loss to the Revenue. Since one of conditions is that order should be prejudicial to the interest of revenue, which is absent in assessee s case under consideration. We note that although the order passed by the Assessing Officer is erroneous because the right income should be taxable in right assessment year however, since the tax rates are same in assessment year 2013-14 and 2014-15 therefore, we note that there is no loss to the Revenue. Considering the smallness of amount and considering the fact that tax rate in both the assessment years are same, hence there is no loss to the Revenue, (one of the conditions is not satisfied to invoke jurisdiction u/s 263) therefore, we do not instruct the Assessing Officer to tax the impugned amount of Rs.9,00,000/- in assessment year 2014-15, as no any useful purpose would be served and it would be unnecessary burden on the Assessing Officer to make the compliance to tax the disputed amount Rs.9,00,000/- in assessment year 2014-15. Decided in favour of assessee.
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2023 (2) TMI 333
Revision u/s 263 - deduction u/s 54F - As per CIT AO has allowed the claim of deduction u/s 54F without proper verification of the facts in the wake of assessee s contention that some of the properties were given on rent and hence commercial in nature - Assessee owns more than one residential property on the date of transfer of the capital asset other than the new asset acquired - HELD THAT:- We are unable to accept the contention of the ld.counsel for the assessee that since the flats are utilized for commercial use, they are not residential in nature and therefore, the assessee is eligible to get the benefit of deduction u/s. 54F of the I.T.Act. Even though, the properties situated at Flat No.505 Begumpet is accepted to be used for business purpose of the assessee being used for conducting meetings with the clients relating to his construction projects undertaken, however, the flats at Swastik Apartments, Siliguri and the three flats at Lakshmi Nilayam, Kavuri Hills in Hyderabad cannot be accepted to be commercial in nature in absence of any satisfactory evidence. Under these circumstances, we are of the considered opinion that the benefit of deduction u/s. 54F was rightly denied to the assessee on the ground that the assessee owns more than one residential property on the date of transfer of the capital asset other than the new asset acquired. The flats are situated in residential societies and there is no evidence on record to show that local authorities have charged the taxes applicable for commercial use of the property or the electricity department levied the charges applicable for commercial properties. Therefore, the decisions relied on by the ld.counsel for the assessee, in our opinion, are not applicable to the facts of the present case. In this view of the matter and in view of the detailed reasoning given by the ld.CIT(A) on this issue, we do not find any infirmity in his order denying the benefit of deduction u/s. 54F of the I.T.Act. We, therefore uphold the order of the ld.CIT(A) on this issue and the grounds raised by the assessee are dismissed.
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Customs
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2023 (2) TMI 332
Rejection of petitioner's application filed under Section 125 of the Customs Act, 1962 seeking for redemption of Indian and Foreign currencies confiscated from the petitioner by paying fine - Original Authority exercised correct discretion, in such rejection or not - HELD THAT:- It is not in dispute that under Section 125 of the Customs Act, 1962, an option to pay a fine in lieu of confiscation can be sought even for prohibited goods. The judgment relied upon by the learned counsel for the petitioner in UNION OF INDIA VERSUS ROSTAM PARVARESH [ 2011 (10) TMI 446 - BOMBAY HIGH COURT] and RAJU SHARMA AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2020 (1) TMI 62 - DELHI HIGH COURT] dealt with cases, where discretion was exercised in favour of the applicant by the Original Authority under Section 125 of the Customs Act, 1962 by granting redemption, which was not interfered with by the High Court - But in the instant case, the Original Authority, the Appellate Authority as well as the Revisional Authority viz., the 1st respondent herein have concurrently held that the petitioner is not entitled for redemption of the confiscated foreign and Indian currencies. Admittedly, the confiscation order passed in respect of foreign and Indian currencies seized from the petitioner has also attained finality. Therefore, it is clear that the petitioner has violated the Regulation 5 of Foreign Exchange Management (Export and Import Currency) Regulations 2015. Under Section 125 of the Customs Act, 1962 it is a discretionary power - Having exercised the discretion by giving sound reasons, the question of interference by this Court exercising powers under Article 226 of the Constitution of India in respect of the orders, which have been challenged in this writ petition will not arise. This Court is not an Appellate Court and only when the orders challenged are perverse, the question of interference with regard to those orders will arise. The reasons given by authorities for rejecting the petitioner's application under Section 125 of the Customs Act are sound and justifiable. Here is a case, where all the three authorities, who have passed the orders, which have been impugned in this writ petition have consistently held that the petitioner is not entitled for redemption. When it is not in dispute that the petitioner has violated Regulation 5 of Foreign Exchange Management (Export and Import Currency) Regulations 2015 and that too when the confiscation order has attained finality and that too when the impugned orders are not perverse, this Court while exercising powers under Article 226 of the Constitution of India has to necessarily reject this writ petition as it is bereft of any merit. This writ petition is dismissed.
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2023 (2) TMI 331
Penalty imposed on the Respondents under Section 112(a) and (b) of the Customs Act, 1962, dropped - It was alleged that the Respondents had admitted to have been involved in several smuggling activities including the one seized on 09.06.2019 - statement recorded before the Customs official is a statement recorded under section 161 of the Criminal Procure Code, or not - evidence collected by the Customs officials under section 108 of the Customs Act - existence of corroborative evidence or not - retraction of statements - Monetary amount involved in the appeal. Maintainability of appeal - Monetary amount involved in the appeal - HELD THAT:- In view of instructions issued by the Ministry of Finance, Department of Revenue, Central Board of Excise Customs F.No.390/Misc./163/2010-JC dated 17.12.2015, the revenue involved in the Appeals are nil as Commissioner(Appeals) has not imposed any penalty on the Respondents, therefore, Appeals are not maintainable before this Tribunal. On merits also, it is found that except the statements recorded by the DRI dated 10.06.2019 and 11.06.2019 which were retracted by the Respondents on the first opportunity available on 12.06.2019 before the Ld.CMM, Kolkata, no other corroborative evidence has been brought on record. In that circumstances penalty on the Respondents are not imposable. In the case of Surjeet Singh Chhabra [ 1996 (10) TMI 106 - SUPREME COURT ] there was an evidence of recovery of gold in the possession of the accused apart from the statement recorded under Section 108 of the Customs Act, 1962. In that circumstances, the decision is not applicable. The Ld.Commissioner(Appeals) has rightly dropped the penalty against the Respondents as there is no corroborative evidence on record in support of the statement made before DRI Officers which were retracted on first available opportunity before the Ld.CMM and no cross-examination of any witness has been granted to the Respondents - Appeal of Revenue dismissed.
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Corporate Laws
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2023 (2) TMI 330
Auction purchase - Seeking direction that the Official Liquidator to remove encroachment from the leasehold land of the company - permission / to take leave of this Court under section 446 of the Companies Act, 1956, not done - in absence of due permission taken from this Court under the provisions of section 446 of the Companies Act, 1956, the decree passed by the Small Cause Court in Rent Suit No. 211 of 1991 is required to be set aside - respondent submitted that the present application has been rejected on the ground of delay and latches. HELD THAT:- In view of this Court it was incumbent for the respondents herein to take permission / to take leave of this Court under section 446 of the Companies Act, 1956 before proceeding with i.e, the Rent Suit no. 372 of 1988 and Civil Misc. Application No. 26 of 2008 for restoration of the Rent Suit No. 211 of 1991. The respondents herein have accepted the fact that no permission has been sought for from this Court, inspite of the order passed by this Court dated 06.08.2009, wherein it was categorically stated that if the respondents were to continue with the above referred proceedings then leave of this Court i.e, the Company Court was required. That the Official Liquidator was to be joined as party in the aforesaid proceedings. And only thereafter, the orders passed in the aforesaid proceedings can be enforced by the respective respondents. It is pertinent to refer the ratio laid down by the Apex Court in the case of HARIHAR NATH VERSUS STATE BANK OF INDIA [ 2006 (4) TMI 253 - SUPREME COURT ] where the Supreme Court held that, the leave under section 446 of the 1956 Act, is required to be taken. Such leave can be obtained even after initiation of the proceedings. In absence of leave the proceedings cannot be recorded as to have been instituted on the date till leave is obtained. The proceedings can be validated only after the leave from the court is obtained. The award passed in Rent Suit No. 372 of 1988 dated 15.01.2015 and also the Judgment passed in Civil Misc. Application No.26 of 2008 on 31.03.2017 below Ex.5 and on 04.12.1999 passed in Rent Suit No.211 of 1991 cannot be executed till the provisions of Section 446 of the Companies Act, 1966 are complied with - Application allowed.
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2023 (2) TMI 329
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi Haryana - not carrying on any operations for a period of two immediately preceding financial years - HELD THAT:- In view of the fact that the Appellant Company having valid property Lease Deed from UPSIDC and still activities are going on in Chandni Chowk shop. Further, Balance Sheet filed for the Financial Year 1998-99 and Acknowledgement of Income Tax Return of the Company filed till the Annual Year 2019-20 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi Bench, Court-II) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law. The impugned order is set aside - the name of the Appellant Company be restored to the Register of Companies subject to the compliances fulfilled - appeal allowed.
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2023 (2) TMI 328
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - Respondent did not send notices/Form STK 1 to the Company and its all of directors as contemplated under Section 248(1) of the Companies Act, 2013 - failure to consider that the Appellant has already annexed the property papers which are the only assets of the company - HELD THAT:- Going through the pleadings made on behalf of the parties and in view of the fact that the Audited Financial Balance Sheets of the Year 2015-16, 2016-17, 2017-18, 2018-19 2019-20 of the Appellant / Company shows that the Appellant/Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant/Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi, Bench-V) as well as Registrar of Companies, NCT Delhi Haryana is not sustainable in law. The impugned order is set aside - The name of the Appellant/Company be restored to the Register of Companies subject to the compliances fulfilled. Appeal allowed.
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2023 (2) TMI 325
Transfer of shares - family dispute - Seeking stay on operation of impugned order - petition was allowed ordering that the Register of Members of the 1st Respondent/company be rectified by registering the names of the Petitioners, after setting aside transfer of 760 shares of the 1st respondent dated 07.03.2005 in favour of the 6th respondent - appointments of 4th respondent/Nirmal Kumar Gupta and 5th respondent/ Girish Gupta as Directors of the 1st respondent/company was ordered to be set aside - reconstitution of the Board of the 1st respondent/company was directed - Extraordinary General Meeting dated 20.04.2005 declared as illegal and invalid - HELD THAT:- It is seen from the record that the Impugned Order is dated 19.10.2022 and subsequent to the directions given by the NCLT, the Respondents has called for an EGM on 28.12.2022 and the Board has been duly reconstituted. Since, this is an event subsequent to the passing of the Impugned Order, unless the Impugned Order is decided on merits, this Tribunal, does not see any substantial grounds to Stay the Operation of the Impugned Order, passed by the Tribunal. As the Learned Counsel for the Applicant/Appellant has raised grounds regarding evidences not addressed to by the NCLT, it is imperative that the main Appeal be heard at length on merits and at this juncture, any consequent developments, subsequent to the Impugned Order, cannot be stayed, in the light of the fact that no substantial reasons have been found by this Tribunal, to order any Status Quo. Keeping in view the Balance Sheets uploaded with the RoC that the Appellants has siphoned off a sum of Rs.42 Lakhs/- and their strong opposition to granting the stay of the Impugned Order, it is believed that the main Company Petition is to be decided at the outset on merits - Additionally, the Prayer seeking permission to operate the Bank Accounts for executing day to day operation is denied keeping in view that the findings in the Impugned Order have a bearing on these consequent developments and unless the main matter is decided on merits, and further specifically keeping in view the Chequered History and Factual Matrix and Rival Contentions, this Tribunal, does not find any Justiciable reason(s), to grant any Interim Stay, as prayed for, by the Petitioner / Appellant. Application dismissed.
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Insolvency & Bankruptcy
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2023 (2) TMI 327
CIRP - Moratorium is in force - Seeking constitution of an arbitral tribunal in terms of Section 18 of the Credit Information Companies (Regulation) Act 2005 - petitioner alleges that the first respondent placed on its website incorrect information provided by the second respondent in respect of the alleged default by the petitioner in respect of loan facilities extended by the second respondent to the borrower - HELD THAT:- When Sections 14 and 19 are read together, it appears that a dispute between a borrower or client, on the one hand, and the credit information company and credit institution, on the other, in relation to the accuracy or completeness of the credit information collected, processed or collated by them would qualify as a dispute relating to the business of credit information. Consequently, such dispute may be referred for arbitration provided no remedy is prescribed in respect thereof by the Act of 2005. Apart from indicating that such disputes may be referred under the applicable ombudsman scheme, learned counsel for the respondents are unable to point out any other remedy that is available to a borrower or client in such circumstances - the present dispute pertains to the business of credit information and, in the absence of any other remedy, resort to arbitration is permissible under Section 18 of the Act of 2005. The first respondent raised the objection that the petitioner did not invoke the arbitration clause after the order - Under Section 18, the RBI is required to appoint the arbitrator or direct parties to constitute the arbitral tribunal as per the Arbitration Act. In this case, by reply dated 01.09.2021, the RBI did not appoint the arbitrator and instead directed the petitioner to approach the Additional Secretary, Department of Agriculture, Cooperation and Farmers Welfare. Therefore, this objection is untenable. The first respondent also contended that the credit information company can correct credit information only upon certification by the credit institution. This could be raised as a defence in arbitration but is not a valid reason to resist the Section 11 petition. The second respondent adverted to the institution of proceedings against the petitioner as personal guarantor before the National Company Law Tribunal at Bombay (the NCLT). Upon initiation of such proceeding, he contended that an interim moratorium is triggered under Sections 95 and 96 of the Insolvency and Bankruptcy Code 2016 (the IBC). Such interim moratorium continues until the petition is admitted and, if admitted, a moratorium would operate thereafter - the interim moratorium applies to any pending legal action or proceeding in respect of any debt and to the initiation of any legal action or proceeding by the creditors of the debtor in respect of any debt. The expression used in Section 96(1) (b) is in respect of any debt and not for recovery of a debt. Although on a purely textual reading, the embargo on fresh proceedings will apply only to creditors of the debtor and not to a guarantor, when interpreted in context, the interim moratorium applies not only to proceedings for recovery of a debt but to proceedings in which the liability of the borrower and guarantor are determined in relation to the credit facility. Turning to the facts of this case, the petitioner seeks the constitution of an arbitral tribunal to adjudicate the dispute pertaining to information put out by the first and second respondents in respect to the alleged default by the borrower and the petitioner. Whether the information provided by the first and second respondents, as the credit information company and credit institution, respectively, is correct or incorrect, in turn, depends on the scope of the personal guarantee provided by the petitioner in relation to credit facilities availed of by the borrower and, consequently, on the liability arising thereunder. Hence, an arbitral tribunal cannot decide whether the information is accurate or inaccurate without examining the scope of the personal guarantee(s) and the liabilities arising thereunder, and the NCLT is seized of the said dispute. Thus, the constitution of an arbitral tribunal, at this juncture, would be premature - After the moratorium ends, in case the petitioner were to succeed in the defence before the NCLT and the NCLT concludes that the petitioner did not guarantee the relevant debts, it would be open to the petitioner to initiate proceedings for the constitution of an arbitral tribunal to adjudicate the dispute relating to the credit information provided by the first and second respondents in terms of Section 18 of the Act of 2005. Petition disposed off.
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2023 (2) TMI 326
Initiation of CIRP - NCLT dismissed the application on the ground that petitioner failed to prove the debt and the liability to pay the same by the corporate debtor - Whether if Section 8 Notice is not replied to, does any provision under the Code prevent the Corporate Debtor from pleading issues of Pre-Existing Dispute or that the debt has been paid, in their Reply to the Petition filed under Section 9 of the Code and whether the Adjudicating Authority was justified in dismissing the Section 9 Application filed by the Appellant herein? HELD THAT:- Neither Section 8 nor Section 9 of the Code indicate that in event Reply to Notice was not filed within 10 days, the Corporate Debtor is precluded from raising the question of dispute or pleading that there or no amount due and payable, the Corporate Debtor is not prevented from establishing by way of a Reply and relevant documents, any Pre-Existing Dispute or paid Operational Debt. There are force in the contention of the Learned Counsel for the Appellant that though a Rejoinder has not been filed, it cannot be construed that the pleadings in the Reply have been admitted to by the Appellant. The failure to file Rejoinder cannot be treated as Admission of the pleadings in the Written Statement. It is an admitted fact that there was an Agreement entered into for Season-2 dated 29.12.2016 whereby the total consideration was agreed at Rs.1.20Crs/-. A perusal of the record evidences that there are Claims and Counter Claims regarding the amount which was agreed upon. The email dated 22.11.2015 seen by the Appellant themselves shows the agreed value of the contract for the first Season as Rs.1.75Crs./-, whereas it is the contention of the Learned Counsel for the Respondent that the amount is not Rs.1.75Crs./- but is Rs.2,23,29,790/-. It is also the case of the Respondent that because of the deficient services rendered in Season-3, the cheque which was wrongly issued for Rs.34,46,000/-, was later instructed to the Bank to stop payment - Admittedly, no action has been initiated under Section 138 of the Negotiable Instrument Act, 1881. As there was no Agreement entered into for Season-3, there is no documentary evidence on record to establish that any amount was due and payable by the Respondent herein. There is no communication on record to establish that the Appellant was entitled by some provisions/promise that this particular amount was liable to be paid. The ratio of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] is applicable to the facts of this case as it is clear from the material on record that there are Claims and Counter Claims with respect to the amounts to be paid and the defense is not spurious or mere bluster - To reiterate, an Agreement has been entered into only for Season-2 and in the absence of any such Agreement for the other seasons, the Appellant/Operational Creditor has failed to discharge its burden that there was indeed an Operational Debt which was due and payable. Appeal dismissed.
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