TMI Tax Updates - e-Newsletter
April 21, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Benefit of exemption notification - Composite supply - Government Entity or not - The Composite supply of works contract is provided by the applicant sub-contractor to the main contractor who is further providing services specified in item (vii) to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. - with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (x) of Notification No. 11/2021- CTR dated 28.06.2017 as amended from time to time. - AAR
Income Tax
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Penalty under Section 270A - Period of limitation - under-reported income - Petitioner cannot be prejudiced by the inaction of the Assessing Officer in passing an order under Section 270AA of the Act within the statutory time limit as it is settled law that no prejudice can be caused to any assessee on account of delay/default on the part of the Revenue. - HC
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Validity of E-assessment proceedings - Mandation of providing personal hearing - valuable right - video conference for the personal hearing - VC conducted in the instant case and as CBDT circular mandates a request for VC hearing and personal hearing is not under contemplation nor requested for by the petitioner. However, once such opportunity of hearing through VC is available, it cannot be for namesake nor can that tire assessee or the authorized representative and must be given in its true spirit. There shall need to be response for the person to be sure that he/she is not talking to the screen and resultant outcome also must bear its testimony. - HC
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Business expenditure - Interest on late payment of TDS - The issue involved is whether the interest paid by the assessee to the government can be termed as compensatory or penal in nature. In our considered view, the assessee has deducted the tax on behalf of the third party and failed to remit the same within the due date and the interest charged on such amount is only compensatory in nature - AT
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Revision u/s 263 by CIT - set off of brought forward business loss from the income assessable under the head 'Capital Gain' - gain of depreciable assets by entering into long term lease agreement - the loss assessed under the head ‘Profits & Gains of Business or Profession’ in the preceding years and brought forward to the relevant year had been rightly claimed as set off against the profits or gain derived from long term leases assessed under the head 'Short Term Capital Gain'. - AT
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Addition u/s.40(a)(ia) - assessee had paid interest to M/s. Tata Motors Finance Ltd. without deducting tax at source - when the assessee could not be held as an assessee-in-default u/s. 201(1) of the Act, therefore, we concur with the claim of the Ld. AR that as per the "2nd proviso" to Section 40(a)(ia) of the Act, the aforementioned amount could not have been disallowed in the hands of the assessee company. - AT
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Accrual of income - subscription monies received in advance - Addition on account of deferred income - CIT-A deleted the addition - The subscription monies received in advance are treated as deferred income and offered to tax on day to day basis which is correct methodology of revenue recognition under mercantile system of accounting. - AT
Customs
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Classification of imported goods - two vessels declared as ‘Excursion Boat Monterey 180 FSW/Volvo Penta 3.0 GL; 135 HP’ - The declared classification prevails by default without going into its merit; of course, the capacity of the imported vessels for carrying up to eight passengers and some luggage, implying unsuitability for endurance and speed that are hallmarks of vessels for sports and pleasure, immunizes the declaration in the bills of entry from being discarded. - AT
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Import of crude palmolein oil - Measurement in the shore tank being taken after cargo is settled - It is not understood how the Revenue can find fault on any direction that the measurements be taken before the turbulence ends and liquid settles. Evidently, any measurement before the liquid settles is likely to be erroneous resulting in wrong quantities being recorded than what is present in the tanks. Revenue cannot seek to collect duty based on such quantities. The commissioner has correctly mentioned in the public notice that the dip measurement must be taken after liquid is settled. - AT
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Classification of goods - aerosol valve - The third Heading 8424 covers, inter alia, mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders. The features of the goods in question are consistent with the scope of the said Heading 8424, inasmuch as these are components of hand operated mechanical appliances meant for spraying liquids (aerosols). Therefore, impugned goods merit classification under Heading 8424 in the light of Rule 1 and 6 of the General Rules for the Interpretation of Import Tariff; and specifically under sub-heading 8424 89 90. - AAR
Indian Laws
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Dishonor of Cheque - insufficiency of funds - delay of 7 days in filing the complaint - time limitation - The issue of limitation for the first time is raised before the Appellate Court and the Court exercising the discretion to condone the delay did not arise at all before the Trial Court and hence the Appellate Court has not committed any error in setting aside the judgment and directing the complainant to file necessary application to condone the delay and the Trial Court by giving an opportunity to the petitioners to consider the said application. - HC
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Dishonor of cheque - vicarious liability - On perusal of the notice and the complaint, it is seen that there is no specific averments against the petitioners who had taken part in the dayto- day affairs of the Company. Hence, it is imperative to array the company as an accused and thereafter, proceed against the Directors and others. Thus, looking from any angle the accused cannot be prosecuted and hence, the complaint against the petitioners is not sustainable. - HC
IBC
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Wages/salaries of the workmen/employees during the CIRP period - There are disputed questions, whether in fact the IRP/RP managed the operations of the corporate debtor as a going concern during the CIRP and there is a serious dispute whether Dahej Yard was operational during the CIRP or not and there is a serious dispute that the concerned workmen/employees of the Dahej Yard and the concerned employees of the Mumbai Head Office actually worked during the CIRP or not and therefore it is directed that let the appellants submit their claims before the Liquidator and establish and prove that during CIRP, IRP/RP managed the operations of the corporate debtor as a going concern and that they actually worked during the CIRP - SC
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Initiation of CIRP - It is clear from the provisions of Section 8 and 9 of the Code, that unlike under Section 7, a Notice under Section 8 is to be issued by an ‘Operational Creditor’ individually and the Petition under Section 9 has to be filed by the Operational Creditor individually and not jointly. Individual Operational Creditor will have to issue their individual claim notice under Section 8 of the Code. Each claim will vary and would be different. The date of notice under Section 8 would also be different and vary on a case to case basis. The notices have to be issued in specific forms filling separately Form 3 and Form 4. Petition under Section 9 in the Form would contain separate individual data - AT
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Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - barred by time limitation or not - This Tribunal holds that ‘Debt’ has been duly acknowledged in the Balance Sheet for the Year 2016-17 which is also duly prepared and authenticated by the Auditors Report amounting to ‘Admission of Liability’ and, therefore, satisfies the requirements of liability for a valid acknowledgement under Section 18 of the Limitation Act, 1963. - AT
Central Excise
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Recovery of excess availed CENVAT Credit - Whether the officers of DGCEI have the power to re-determine the assessable value? - Classification and valuation are part of the assessment of duty. Valuation of the goods cleared by the supplier cannot be modified by the officers at the end of the recipient so as to reduce the CENVAT credit. - AT
VAT
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Extension of tenure of the existing Technical Member of the West Bengal Taxation Tribunal - The Administrative Member of the Tribunal has continued by virtue of interim order of learned Single Judge, therefore, the orders passed by him in the meanwhile are saved from challenge on the ground of his continuance as such - Since it is pointed out that due to non-appointment of the Technical Member, the work of the Tribunal is suffering, therefore, the State Government are directed to take expeditious steps for appointment of the Technical Member in the Tribunal. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (4) TMI 919
Refund of amount towards IGST - Seeking to extend amending Notification no.16/2015Customs, dated 01.04.2015 - seeking to set aside Trade Notice 11/2018, dated 30.06.2017 - HELD THAT:- Mr. Malak Manish Bhatt, Advocate waives notice for respondent No. 1. Notice be issued to other respondents. List all the matters together on 20-9-2021 before the appropriate Bench.
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2022 (4) TMI 918
In what manner is three times the monthly SGST tax taken to be the principal and 100% penalty imposed? - HELD THAT:- It is for the petitioner to file an application seeking review of the order and not preferring the SLP. SLP dismissed.
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2022 (4) TMI 917
Maintainability of appeal - time limitation - appeal dismissed on the ground that the certified copy of the impugned order challenged therein was not filed in time in accordance with Rule 108 (3) of the WBGST Rules 2017 - HELD THAT:- In view of the order passed by the Hon ble Apex Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (11) TMI 387 - SC ORDER] , the relevant period was excluded in computing limitation period for filing an appeal. The petitioner is entitled to get the benefit of the same as the relevant period is covered by the time period referred to in the order passed by the Hon ble Court. The delay in filing the certified copy is condoned, and the respondent nos. 3 and 4 are direced to consider the appeal preferred by the petitioner under the WBGST Act afresh on merits - the writ application is disposed of.
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2022 (4) TMI 916
Blocking of Input Tax Credit (ITC) - Validity of Rule 86A of the Uttar Pradesh Goods and Services Tax Rules, 2017 - HELD THAT:- Learned Counsel for the petitioner states that the petitioner does not intend to press challenge to the validity of Rule 86A of the Rules - the order blocking the Input Tax Credit upto ₹ 2,67,16,352/- available in the Electronic Credit Ledger of the petitioner came to an end on its own, by operation of law, on 9-7-2021. No other order has been shown as may allow the Input Tax Credit to remain blocked beyond 9-7-2021. The present writ petition stands disposed of.
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2022 (4) TMI 915
Maintainability of petition - opportunity of hearing not provided - violation of principles of natural justice - ex-patre order - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This is for two reasons - (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences.
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2022 (4) TMI 914
Benefit of exemption notification - Composite supply - Government Entity or not - If the tax rate of M/s. Mahalaxmi B T Patil Honai Constructions JV (Referred to as JV) is NIL as per SI No 3A- Chapter No. 9954 as per Notification No. 12/2017 C.T. (Rate) dated 28.06.2017, as amended by Notification No. 2/2018-C.T. (Rate) dated 25.01.2018, whether the benefit of the same tax rate i.e. NIL can be availed ro not? - benefit of SI No 3 (x) - Chapter No. 9954 as per Notification No. 01/2018-C.T. (Rate) dated 25.01.2018 (amendments in the Notification No 11/2017- Central Tax (Rate) dated 18th June 2017) available or not - HELD THAT:- The impugned Contract/Work Order, involves activities consisting of Earth Work such as Excavation for Tunnel, removing of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein, the total earth work is approximately 91% and construction work is around 9% wherein transfer of property is involved and held that the activity of the Principal Contractor, part of which is outsourced to the applicant, is a Composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, where such supply is to a Governmental Entity, i.e. GMIDC. Further we also held that, the Principal Contractor s supply is to a Government Entity, i.e. GMIDC and the said work has been procured by GMIDC in relation to work entrusted to it by the State Government of Maharashtra. Since it is already held that the activity of the Principal Contractor is not covered under Sr. No 3A- Chapter No. 9954 as per Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, as amended from time to time, in the subject case also relying on the same ratio we are of the opinion that the applicant cannot avail the benefit of Sr. No 3A- Chapter No. 9954 as per Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, as amended. Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017 provided by a sub-contractor (in this case, the applicant) to the main contractor (Principal Contractor) providing services specified in item (vii) of Sr No 3 of Notification No. 11/2017-CTR to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity is covered under Section 3 (x) of Notification No. 11/2017 - CTR dated 20.06.2017 as amended - The Composite supply of works contract is provided by the applicant sub-contractor to the main contractor who is further providing services specified in item (vii) to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. The impugned supply of the applicant is covered under Sr.No. 3(x) of Notification No. 11/2017-CTR dated 20.06.2017 as amended from time to time - Notification No.11/2017-CT (Rate) dated 28/6/2017 as amended, was amended vide Notification No. 15/2021-Central Tax (Rate) dated 18.11.2021 (with effect from 01.01.2022) and in Sr. No 3, in column (3), in the heading Description of Services , in item (x) for the words Union territory, a local authority, a Governmental Authority or a Government Entity the words Union territory or a local authority shall be substituted. That means words a Governmental authority or a Government Entity are omitted. Therefore, with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (x) of Notification No. 11/2021- CTR dated 28.06.2017 as amended from time to time.
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Income Tax
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2022 (4) TMI 913
Maintainability of appeal before the High Court against Penalty u/s 271(1)(c) - HC allowed the said appeal preferred by the Revenue and has set aside the order passed by ITAT deleting the penalty under Section 271(1)(c) - appeal preferred by the Revenue was not maintainable as the penalty amount was reduced to ₹ 6,00,000/(approximately) and therefore when the tax effect would be less than ₹ 20,00,000/, in view of the CBDT Circular dated 10.12.2015 the appeal preferred by the Revenue before the High Court was not maintainable - jurisdiction of the Additional Commissioner of Income Tax to allow imposing penalty -- HELD THAT:- We see no reason to interfere with the findings recorded by the High Court on merits on the powers of the Additional Commissioner to grant the approval sought by the AO for imposing penalty under Section 271(1)(c) of the Income Tax Act. What was assailed by the Revenue was the penalty Imposed and not the penalty reduced by the CIT(A). Before the Tribunal, both the Revenue, as well as the assessee, preferred the appeals and the entire penalty amounting to ₹ 29,02,743/was an issue before the Tribunal as well as before the High Court. The subsequent reduction in penalty in view of the subsequent order cannot oust the jurisdiction. What is required to be considered is what was under challenge before the Tribunal as well as the High Court. What was challenged by the Revenue was the penalty amounting to ₹ 29,02,743/and not the subsequent reduction of penalty by the CIT(A). The aforesaid aspect has been dealt with by the High Court in paragraph 17 of the impugned judgment and order. We are in complete agreement with the view taken by the High Court. Therefore, it cannot be said that the appeal before the High Court at the instance of the Revenue challenging the order passed by the ITAT was not maintainable in view of CBDT circular dated 10.12.2015. Appeal dismissed.
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2022 (4) TMI 912
Disallowance of the commission expenditure - HELD THAT:- This Court is of the opinion that whether any agent has rendered any service or not to the appellant is a question of fact. In fact, even in Conimeters Electricals (P) Ltd. [ 2009 (8) TMI 1236 - DELHI HIGH COURT] and Asian Mills Pvt. Ltd [ 2021 (12) TMI 232 - GUJARAT HIGH COURT] the Courts dismissed the appeals filed by the Revenue on the ground that no substantial question of law arose in the said matters as the issue as to whether any agent had rendered any service or not was a question of fact. In the present case, the authorities below have given a concurrent finding of fact that the Appellant had failed to produce any evidence to prove that service had been rendered by Mr. D.N. Pandey to the appellant. The Tribunal in its order has also concluded that merely producing some emails exchanged between Mr. D.N. Pandey and the Appellant/assessee is not sufficient to prove that Mr. Pandey had provided any kind of service. The Profit and Loss Account of Mr. D.N. Pandey for the previous assessment year shows that out of gross receipt of ₹ 1,64,40,356/-, he had incurred expense of ₹ 1,38,05,010/- towards labour, loading unloading charges! Last but not the least, the agreement between Mr. D.N. Pandey and the Appellant/assessee does not mention any specific scope of service. Thus no substantial question of law arises for consideration in the present case and the present appeal is dismissed.
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2022 (4) TMI 911
Addition u/s 68 - unexplained sum credited in the book as Share Capital and Premium - ITAT deleting the addition made by the AO by order u/s 144/263 based on remand report - whether the Tribunal was right in affirming the order passed by the Commissioner of Income Tax (Appeals) - 4, Kolkata by noting the facts and circumstances of the case that the remand report was called for from the Assessing Officer, who has certified the genuineness of the transaction and the creditworthiness and the identity of the share applicants - HELD THAT:- Tribunal after noting the findings recorded by the CIT(A) held that the revenue has no locus standi to file the appeal against its own findings in the remand report. In this regard, the Tribunal placed reliance on the decision of the High Court of Madras in the case of Smt. B. Jayalakshmi v. Assistant Commissioner of Income-tax, Salary Circle-II, Chennai[ 2018 (8) TMI 208 - MADRAS HIGH COURT] . The Tribunal also referred to the decision of a coordinate Bench of the Tribunal in the case of D.C.I.T, Central Circle-1(4), Kolkata vs. M/s. Shraddha Tower Pvt. Ltd[ 2018 (10) TMI 1405 - ITAT KOLKATA] and dismissed the appeal filed by the revenue. We find that the Tribunal has rightly taken note of the legal position and dismissed the appeal filed by the revenue and we find no grounds to interfere with the said order. Accordingly, the appeal is dismissed and substantial questions of law are answered against the revenue.
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2022 (4) TMI 910
Penalty under Section 270A - Period of limitation for initiating penalty proceedings - under-reported income - HELD THAT:- This Court is of the view that it is only in cases where proceedings for levy of penalty have been initiated on account of alleged misreporting of income that an assessee is prohibited from applying and availing the benefit of immunity from penalty and prosecution under Section 270AA. Petitioner cannot be prejudiced by the inaction of the Assessing Officer in passing an order under Section 270AA of the Act within the statutory time limit as it is settled law that no prejudice can be caused to any assessee on account of delay/default on the part of the Revenue. In the present case, the petitioner has satisfied the aforesaid conditions, inasmuch as,the tax has been paid on the additions, appeal has undisputedly not been filed; and penalty (as would be evident from the penalty notice) has been initiated on account of underreporting of income. Consequently, this Court is of the view that the petitioner acquired a right to be granted immunity under Section 270AA of the Act. This Court, in Schneider Electric South East Asia (HQ) Pte Ltd. [ 2022 (3) TMI 1295 - DELHI HIGH COURT] has held, This Court is further of the view that the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of Section 270AA of the Act to encourage/incentivize a taxpayer to (i) fast-track settlement of issue, (ii) recover tax demand; and (iii) reduce protracted litigation. The impugned order under Section 270A of the Act is set aside and the respondent is directed to grant immunity under Section 270AA of the Act to the petitioner. - Decided in favour of assessee.
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2022 (4) TMI 909
Tax liability under The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 - Later on the liability towards deposit of tax has been relaxed by drawing a proceedings under Section 30 of the Act of 2015, whereby, major part of the tax liability was kept in abeyance - as contended that the authority, who had initiated penalty proceedings under Section 41 of the Act of 2015 ought to have stayed further proceedings awaiting the order that may be passed in appeal.HELD THAT:- We find that the petitioner has suffered a tax liability after adjudication by the Assessing Officer culminating in issuance of assessment order on 31.03.2021. Aggrieved by that, an appeal has been preferred by the petitioner before the Appellate Authority and there is no stay order placed before this Court by the petitioner. An order dated 05.01.2022 by an officer in the office of the Joint Commissioner of Income-Tax Central Circle ADDL/JCID Central, Jaipur has been placed and relied upon to submit that tax liability to some extent has been kept in abeyance. However, keeping in view the submissions of learned counsel for the respondent regarding mandate of Section 47 of the Act of 2015 with regard to bar of limitation for completion of penalty proceedings, if no order is passed after expiry of a period of one year from the end of the financial year in which the notice for imposition of penalty is issued under Section 46 of the Act of 2015 and further taking into consideration that the petitioner does not challenge the jurisdiction of the authority in initiating penalty proceedings but only seeks to invoke his discretion not to proceed with penalty proceedings till pendency of appeal, we are not inclined to stay the penalty proceedings. However, if any coercive steps are initiated after passing of the penalty proceedings, it would be open for the petitioner to move appropriate applications before the authority in accordance with law.
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2022 (4) TMI 908
Validity of E-assessment proceedings - Mandation of providing personal hearing - valuable right - video conference for the personal hearing - Denial of principles of natural justice - opportunity of hearing through video conferencing could not be afforded to the petitioner - petitioner was unable to find any hyperlink on the Income Tax Portal which could be activated for the purpose of confirming the virtual conference, therefore, he wrote for number of times to activate the hyperlink for making request for personal hearing - HELD THAT:- It was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. As noted above, several requests had been made for personal hearing by the petitioner, none of which were dealt with by the respondent/revenue. The net impact of this infraction would be that, the impugned orders will have to be set aside. It is ordered accordingly. We would, therefore, hold that the provisions which have been envisioned to bring transparency and accountability in the system if are not observed as contemplated under the law, it will become imperative for the Court to intervene. A detailed study on the subject of faceless assessment regime in India in comparison of the other foreign countries is brought on record by learned Senior Advocate Mr. Soparkar. The study eulogizes that It is a revolutionary move by the Indian Government to improve the tax transparency by way of disconnecting the taxpayer and the tax authorities. The electronic correspondence, personal hearing through video conference and central point of contract aim to ease the representation process for the taxpayers and tax authorities while maintaining objectivity and anonymity. The comparative study has been taken taken while comparing with the six countries i.e. Australia, UK, USA, Canada, Netherlands and Singapore. The author summed up saying that some of the aspects newly introduced in India are nearly similar to the procedure prevailing in other countries. On video conference, it says that personal hearing in India is through video conference and not in person whereas in all other countries, there is no restriction to the number of hearings and there is no specific condition needed for invoking the provision of personal hearing. The personal hearing also is in person and not limited to the video conference. VC conducted in the instant case and as CBDT circular mandates a request for VC hearing and personal hearing is not under contemplation nor requested for by the petitioner. However, once such opportunity of hearing through VC is available, it cannot be for namesake nor can that tire assessee or the authorized representative and must be given in its true spirit. There shall need to be response for the person to be sure that he/she is not talking to the screen and resultant outcome also must bear its testimony. According to this Court, this is an argument on merit as on the ground of non-observance of principles of natural justice the Court is choosing to relegate the matters to the concerned authority, it would prefer not to enter into this arena of merit. The same shall be reserved to be agitated before the Income Tax Authorities and thereafter, if eventuality arises in future. The other two decisions are along the line and therefore are not required to be diluted being along the very line. We are of the firm opinion that this is a matter where the order needs to be quashed and the petitioner needs to be availed an opportunity afresh by the respondent from the stage where it was left. Accordingly, the petition is Allowed. The order dated 17.09.2021 is quashed and set aside with all its consequences. Notice issued of penalty under Sections 274 and 278(A) dated 17.09.2021 also shall be quashed. This will not in any manner prejudice the rights of either side.
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2022 (4) TMI 907
Reopening of assessment u/s 147 - TDS u/s 194J - adjustment of adding 50% presumptive income u/s 44ADA on manpower supply turnover - whether the CPC u/s. 143(1)(a) of the Act can make any adjustment/addition in the aforesaid facts and circumstances? - HELD THAT:- According to us, the CPC could not have made the adjustment since the question of fact arises on the factual matrix of this case as noted above. The assessee s contention is that the amount of ₹ 31,21,167/- is included in the turnover of ₹ 52,81,344/-. Therefore, merely based on TDS entries given in Form 26AS for deduction of tax u/s. 194J, the adjustment could not have been made without conducting any enquiry, more particularly when the man power supply is not covered as a profession within the meaning of section 44AA of the Act read with relevant notifications. We find force in the contention of the Ld. AR that this particular issue could not have been decided by the CPC u/s. 143(1)(a) of the Act. In case, if the department finds that there is an anomaly, then it has liberty to do so by conducting scrutiny assessment under the provisions of law or to re-open the assessment u/s. 147 of the Act. Thus, we find that CPC had no jurisdiction to make impugned adjustment within the meaning of section 143(1)(a) of the Act. Accordingly, the adjustment made by the CPC stands deleted. Appeal of assessee allowed.
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2022 (4) TMI 906
Business expenditure - Interest on late payment of TDS - Bonafide claim of allowing deduction of interest on late payment of TDS from Total Income - HELD THAT:- We observe that Ld.CIT(A) has relied upon the decision of Ferro Alloys Corporation [ 1991 (12) TMI 39 - BOMBAY HIGH COURT] in which the Hon ble High Court has not discussed anything on merit considering the fact that the case Bharat Commerce Industries Ltd. [ 1998 (3) TMI 2 - SUPREME COURT] was pending before Hon ble Supreme Court and we observe that even in the case of Bharat Commerce Industries Ltd, the issue involved is relating to interest paid on late payment of advance-tax. Therefore, the issue involved in the present case is not relating to late remittance of advance-tax but late remittance of TDS. The issue involved is whether the interest paid by the assessee to the government can be termed as compensatory or penal in nature. In our considered view, the assessee has deducted the tax on behalf of the third party and failed to remit the same within the due date and the interest charged on such amount is only compensatory in nature. Here we notice that the co-ordinate bench of this Tribunal has already held the same view in the case of STUP Consultants Pvt Ltd [ 2019 (1) TMI 1259 - ITAT MUMBAI] interest expense on the delayed payment of service tax is allowable deduction.The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. Thus we hold that the interest paid on delayed payment of TDS u/s 201(1A) is an allowable deduction. We direct accordingly. Assessee succeeds in its appeal.
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2022 (4) TMI 905
Revision u/s 263 by CIT - Addition u/s 68 - issue of share capital/premium - whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the Pr. CIT rightfully exercised his revisional power? - HELD THAT:- In the case in hand, it is other way round i.e. the assessee is pleading before the Ld. Pr. CIT to look into the records at the time when he exercises the revisional jurisdiction u/s 263 of the Act wherein enquiries had been conducted by the AO during the search assessment proceedings in the year 2015. In the instant case, the assessee pleads that the subsequent events/enquiry conducted by the AO in the year 2015 on the issue of share capital and premium, [which issue has been found fault by the Ld. Pr. CIT in respect of the assessment order dated 28.03.2011 by passing the impugned order], should be looked in to at the time of exercising revisional jurisdiction is legally tenable and the Ld PCIT ought not to have passed the impugned order without looking in to the subsequent enquiry conducted by the AO on this issue [share capital and premium] in 2015 and consequently the PCIT erred in ignoring the records which contained the enquiry conducted by AO in the year 2015. And therefore the omission on the part of PCIT to ignore the enquiry carried out by the AO [AO, Central Circle] in respect of share capital and premium collected by the assessee, vitiates his impugned action of finding fault with the action of AO [even in respect of the original assessment] on account of lack of enquiry on the part of the earlier AO in respect of share capital/premium. Subsequent events/development also need to taken into consideration while the Ld. Pr. CIT exercised his jurisdiction u/s. 263 of the Act, by applying the same standard in the case in hand the Ld. Pr. CIT ought to have looked into the subsequent enquiries conducted by the AO albeit u/s. 153A of the Act and examined as to whether there was enquiry conducted by the AO in 2015 in respect of the nature and source of the share capital and premium collected by the assessee for AY 2009-10. Here in this case the Ld. Pr. CIT ignored to look into the subsequent action carried out by the AO in the case of assessee s assessment for AY 2009-10 which is an omission on his part which is erroneous/illegal because as per the definition given for records [u/s 263 of the Act], even the subsequent assessment proceeding u/s. 153A is deemed to always to have been included in the assessment records for AY 2009-10, which at the time of examination by him u/s 263 of the Act, he was duty bound to examine. And if the Ld PCIT had examined the assessment folder for AY 2009-10, which would have definitely thrown light in respect of enquires conducted by the AO on the issue of share capital/premium. Therefore, the Ld. Pr. CIT erred in not looking into the records pertaining to the 153A proceeding (post-search) and thereby he ignored the relevant material (enquiry conducted by AO, Central Circle) to hold the action of the AO in original assessment to be erroneous as well as prejudicial to the interest of revenue - the order of Ld. Pr. CIT cannot be sustained and therefore, quashed. Appeal of assessee allowed.
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2022 (4) TMI 904
Revision u/s 263 by CIT - set off of brought forward business loss from the income assessable under the head 'Capital Gain' - gain of depreciable assets by entering into long term lease agreement - HELD THAT:- As stated earlier, the assessee is engaged in the business of developing leasing out commercial properties. The activity of leasing such constructed spaces is undeniably its core business activity - these properties constructed by the assessee are its 'business asset' reflected by way of 'Fixed Asset'. Undisputedly, the income derived from leasing these fixed assets on short term basis has all along been taxed as 'Business Income'. Under the scheme of the Act, the income from grant of long term capital leases results in deemed transfer of fixed assets, and therefore by way of operation of deeming fiction set out in Section 50 of the Act, the excess/ gain over the WDV of the fixed asset has to be taxed as 'Short Term Capital Gain'. It cannot be denied that the act of entering into 'long term leases is the business activity of the assessee and the income, which is assessed by way of capital gain, bears the character of profits or gain derived from such leasing business. Hence, irrespective of under which head such income is taxable ( short term capital gain in the present case), we are of the view that, the loss assessed under the head Profits Gains of Business or Profession in the preceding years and brought forward to the relevant year had been rightly claimed as set off against the profits or gain derived from long term leases assessed under the head 'Short Term Capital Gain'. AO had applied his mind to this particular claim of the assessee in the earlier years and had been accepted and, therefore, when the same claim had been raised in the relevant year as well, the AO had rightly accepted it, in absence of any change of facts or position of law, which permeated through the earlier assessment years. In our view therefore, the AO could not have disturbed the aforesaid settled position. For that, we rely on the decision of Radhasoami Satsang[ 1991 (11) TMI 2 - SUPREME COURT] AO had correctly allowed the set off of brought forward business loss against the short term capital gain in the relevant year and therefore AO's order cannot be termed as 'erroneous' for paving way to invoke the revisional jurisdiction of Ld. Pr. CIT under of Section 263 of the Act. In the instant case that, although the assessee had explained the above issue in detail to the Ld. Pr. CIT supported with judicial precedents, the Ld. Pr. CIT however did neither himself examine this issue nor recorded his own finding proving that the explanations furnished by the assessee suffered from any infirmity and because of which he found that the view adopted by the AO was unsustainable in law making his order as erroneous within the meaning of Section 263 of the Act. In our opinion, once the Ld. Pr. CIT initiates the proceedings u/s 263 of the Act for specific reasons and these reasons are met by the assessee, then it was incumbent upon the Ld. CIT to himself independently deal with the objections and record his own satisfaction to prove that the AO's order is in fact erroneous and prejudicial to the interests of the Revenue for the reasons out in the SCN. CIT in such a situation cannot merely set aside the assessment order directing AO to pass the order of assessment afresh, effectively giving the AO a second innings without establishing that the assessment order was indeed erroneous as well as prejudicial to the interests of the Revenue. CIT merely setting aside the AO's order without independently dealing with merits of the issue was untenable and therefore the same is set aside. We hold that the AO s order cannot be held to erroneous as well as prejudicial to the interest of the revenue - since AO s order is valid in the eyes of law as per the law laid by the Hon ble Supreme court and various other High courts, we find that the Ld. Pr. CIT erred in interfering/interdicting the order of the AO on this issue. Appeal of assessee allowed.
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2022 (4) TMI 903
Penalty u/s 271(1)(c) - additions made under section 68 and 69 - Assessee not appeared during the course of appellate proceedings - HELD THAT:- Assessee has not appeared during the course of appellate proceedings or produced any details towards quantum additions under sections 68 and 69 of the Act as well as levy of penalty under section 271(1)(c) of the Act. The reasons given by the assessee is that the customs proceedings are pending before the Customs Excise Service Tax Appellate Tribunal (South Zonal Bench), Chennai towards levy of customs duty and therefore, the assessee could not attend during the appellate proceedings. Though the ld. CIT(A) has given as many opportunities, the assessee has not appeared or produced any material to substantiate its claim. However, the ld. CIT(A) has not discussed the merits of the case. Hence to meet the ends of natural justice, we are of the opinion that the assessee shall be afforded an opportunity of being heard to substantiate its case before the ld. CIT(A). Accordingly, we set aside the orders - Appeals filed by the assessee are allowed for statistical purposes.
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2022 (4) TMI 902
Nature of receipt - compensation money received - whether the said transaction was purely forfeited security deposit in the nature of revenue receipt and did not come under the extinguishment or relinquishment envisaged by Sec.2( 47) ? - HELD THAT:- Clear and unequivocal terms of the proposal was respected by accepting the offer, and the amount of ₹. 15 crores was paid to the assessee, during assessment year 2011-12. However, even thereafter, the assessee claims that she continued to classify the same as 'refundable security deposit' and the company continue to claim the same as 'recoverable advance'. On perusal of the hard copies of the Returns of Income of the assessee for subsequent years i.e. assessment years 2012-13 to 2015-16, the ld. CIT(A) noticed that even upto assessment year 2015-16, the amount in question has not been offered to tax by the assessee. This also completely contradicts the stand taken by the assessee in this regard. As assessee has advanced 100% of the cost price of the property of construction of 35,000 sq.ft. IT park project, we find that the ld. CIT(A) has correctly held that the amount of ₹.7 crores (the receipt of ₹.15 crores Less ₹.8 crores paid by the assessee to the developer) was liable to tax as Long Term Capital Gains in the hands of the assessee, subject to indexation for the relevant years and rightly directed the Assessing Officer to bring to tax the Long Term Capital Gains computed by treating ₹.15 crores as 'Sale consideration' and ₹.8 crores as 'Cost of acquisition'. Thus, the ground raised by the assessee is dismissed. Alternative plea raised before the ld. CIT(A) that if at all it were to be assessed as an income, it could be done only in the year when the Developer squares up the transaction in its books - CIT(A) has clearly mentioned in the appellate order at page 49 that the ld. CIT(A) has called for and perused the hard copies of the returns of income of the assessee for subsequent years i.e., assessment years 2012-13 to 2015-16, the ld. CIT(A) noticed that even upto assessment year 2015-16, the amount in question has not been offered to tax by the assessee. In view of the above facts, we are of the opinion that the ld. CIT(A) has rightly rejected the alternative plea of the assessee and the thus, the ground raised by the assessee is dismissed. Income has to be taxed under the head income from other sources - CIT(A) has rightly directed the Assessing Officer to bring to tax the Long Term Capital Gains computed by treating ₹.15 crores as 'Sale consideration' and ₹.8 crores as 'Cost of acquisition' considering the fact that the assessee has advanced 100% of the cost price of the property of construction of 35,000 sq.ft. IT park project, the ground raised by the Revenue is dismissed.
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2022 (4) TMI 901
Revision u/s 263 by CIT - fresh unsecured loans fresh capital introduced - Proof of lack of enquiry - HELD THAT:- Assessee case was selected for limited scrutiny on the issue of Interest expenses and Increase in Capital. The AO also issued notice under section 142(1) dated 20.09.2016 along with a questionnaire. Thereafter upon change of incumbent of charges, notice u/s 142(1) along with questionnaire issued on 18.12.2017 fixing the hearing on 19.12.2017. Thus in response to the notice issued under section 142(1), the assessee attended the proceedings through his A/R and also furnished the required details/documents as well as books of account which were examined by the AO. There is no dispute that the AO(s) has conducted the enquiry on the issue for which the case was selected for scrutiny and after satisfying himself the AO finally concluded that the assessee is engaged in the business of real estate and after examining the details and records produced before him and discussion with the A/R the returned income is accepted. Thus it is not a case of lack of enquiry on the part of the AO as once he was satisfied with the supporting evidences produced by the assessee he has accepted the claim. Question of lack of enquiry does not arise when the AO has taken up the scrutiny and issued the notice under section 142(1) along with a questionnaire calling for all the details relevant to the Interest expenses and Increase in Capita - assessee produced the relevant details and evidences and specifically the purchase bills of the assets, return of income, computation of total income, balance sheet, profit loss account, capital account and personal bank statement of the assessee and complete books of accounts. It is further noticed from the reply furnished by the assessee to the AO as well as to the ld. PCIT that the interest expenditure claimed in Profit Loss account were of car loan and there was no work-in-progress, and no other interest was claimed out of business income on account of alleged addition to fixed assets. In the fixed assets the additions were of computer for ₹ 11,700/- and Refrigerator AC of ₹ 38,800/- during the year. Accordingly no high interest expenses were claimed very against the new capital added and addition made to the fixed assets. Regarding the addition in capital account, the assessee furnished a copy of his personal bank account explaining the nature and source of the credit entries and the ld. AO after verification of the same from the relevant records and books of account accepted the same. It is evident and verifiable from the order passed by the ld. PCIT that he has not doubted/pointed out any deficiency in the said details. Thus the provisions of section 263 were invoked by the ld. PCIT due to the reason that he has a different view regarding the allowability of deduction under section 57 section 68 of the IT Act in respect of the Interest expenses and Increase in Capital respectively. There is no quarrel on the point that lack of enquiry renders the order of the AO as erroneous so far as prejudicial to the interests of the revenue. However, when there is no allegation and even otherwise it is manifest from the record that this is not a case of lack of enquiry on the part of the AO but the AO after satisfying himself about the claim of Interest expenses and Increase in capital consequent upon the examination and verification of the concerned details, evidences and books of account produced by the assessee, allowed the claim of the assessee and accepted the source of addition made to the capital. We find that when the explanation furnished by the assessee on this issue is satisfactory and the AO has taken a possible view then the ld. PCIT is not permitted to take a different view merely because the view taken by the AO was not acceptable to the ld. PCIT. Therefore, the proceedings which are beyond the scope of the revisional proceedings, are not permissible. In view of the above undisputed facts and legal position on the issue decided by various courts, and also clarifications issued by the CBDT by way of various circulars which are binding on the taxing authorities, we quash the order passed u/s 263 - Addition u/s 68 - As submitted by the ld. A/R that the said capital was transferred from his personal bank account, and a copy of bank account explaining the nature and source of credit which were either withdrawal from the partnership firm s capital account or realization from debtors. The said copy of bank account along with copy of Balance Sheet and other financial statements were duly produced before the ld. AO and the copy of bank statement and other relevant supporting documentary evidences were also filed before the ld. Pr. CIT. The ld. A/R further submitted that the ld. Pr.CIT has also not pointed out any defect or deficiency in the said documents filed. In view of the above facts duly supported by documentary evidences available on assessment record, the sources of fresh capital introduced were duly explained by the assessee and which were after taking possible view and a considered opinion the ld. AO has correctly accepted as explained.- Decided in favour of assessee.
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2022 (4) TMI 900
Unaccounted sales arises due to difference in receipts between the Assessee's books of account and as per Form No. 26AS - CIT(A) affirmed the amount on account of mismatch of amounts as per Form No. 26AS and gross receipts as per audited accounts on the ground that said amount was not accounted for by the Assessee in its gross receipts - HELD THAT:- As decided in the cases of Shri Kayyum Ahmed [ 2015 (5) TMI 1073 - ITAT DELHI] and Sohan Lal Aggarwal [ 2021 (8) TMI 1292 - ITAT DELHI] and submitted that in the identical situation, the Hon ble Courts clearly held that in case of the difference between the Assessee s books of account and as per Form No. 26AS, then on the said difference,only embedded portion of the profits is to be taken into consideration and the addition is to be made thereon but entire turnover cannot be added to the income of the Assessee We are inclined to accept the said decisions and consequently while taking into consideration the net profit rate of the previous year, in our considered view, the justice would be met by confirming the addition only to the extent of 5% of the undisclosed turnover. Hence, the AO is directed to restrict the addition to such extent only.
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2022 (4) TMI 899
Maintainability of appeal against Reopening of assessment u/s 147 - General Manager, (CT GST), BESCOM a valid Power of Attorney from the assessee company to verify the appeal of the assessee - whether the appeal filed by the assessee is invalid or defective? - Scope of Section 140 as prescribes who has to sign the return of income - HELD THAT:- From the language of section 140, it can be easily noticed that only the returns of individuals and companies can be signed by a valid Power of Attorney holders in the specified circumstances and the other categories of the assessee are not entitled to this privilege. Further, section 253(6) of the Act states that the appeal to the appellate tribunal need to be filed in the prescribed form and it is also to be verified in the prescribed manner. Meanwhile Rule 47(1) of the I.T. Rules also clarifies that appeal shall be signed by a person specified in sub-rule (3) of Rule 45. Rule 45(3) states that the form of appeal referred to subrule (1) to be verified by a person who is authorized to verified by the person who is authorised to verify the return of income under section 139(1) of the Act, as applicable to the assessee. According to the provisions of section 140(c) of the Act states that in case of a company, where the appeal is to be verified by the managing director of the company or for unavoidable reason, such managing director is not able to verify the return or where there is no managing director; by any director thereof. Further, there was an amendment w.e.f. 1.4.2020 to the provisions of section 140(c) of the Act where it was stated that the return could be filed by any other person as may be prescribed for this purpose. Even if we apply this amendment retrospectively also, it is not clear whether the General Manager, (CT GST), BESCOM was holding a valid Power of Attorney from the assessee company to verify the appeal of the assessee even as provided u/s. 140(c) of the Act. Even this information is not available on the record. We therefore dismiss the appeal in limine . Appeal dismissed.
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2022 (4) TMI 898
Addition u/s 36(1)(va) - delayed payment of employees contribution towards PF ESI - contribution of PF and ESI deposited belatedly but before due date of filing of return of income U/s 139(1) - whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021? - HELD THAT:- As per Tribunal in the case of M/s Kogta Financial (India) Ltd. [ 2022 (1) TMI 250 - ITAT JAIPUR] this issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. This issue is decided in favour of the assessee and consequently, the disallowance made on account of employees contribution towards PF ESIC deposited before due date of filing of return of income U/s 139(1) is deleted. - Decided in favour of assessee.
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2022 (4) TMI 897
Addition u/s.40(a)(ia) - assessee had paid interest to M/s. Tata Motors Finance Ltd. without deducting tax at source - HELD THAT:- Fact borne from the record that the assessee had failed to deduct tax at source on the amount of interest that was paid by it to M/s. Tata Motors Finance Ltd.- as the aforesaid payee, viz. Tata Motors Finance Ltd. had duly taken into account the aforementioned amount of interest while computing its income for the year under consideration and had paid the corresponding taxes on the same, as is evidenced from the certificate of the Chartered Accountant in Form 26A, dated 03.05.2017 filed by the assessee before us, therefore, we are of the considered view, that as stated by the Ld. AR, and rightly so, the assessee could not be held as an assessee-in-default as regards the aforementioned amount under Section 201(1) of the Act. Accordingly, now when the assessee could not be held as an assessee-in-default u/s. 201(1) of the Act, therefore, we concur with the claim of the Ld. AR that as per the 2nd proviso to Section 40(a)(ia) of the Act, the aforementioned amount could not have been disallowed in the hands of the assessee company. Backed by our aforesaid deliberations, we, herein, set-aside the order of the CIT(Appeals) and direct the Assessing Officer to vacate the disallowance - Appeal of assessee allowed.
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2022 (4) TMI 896
Disallowance made for want of books of account as well as cash book of the assessee - Admission of additional evidences - assessee furnished two cash books in the form of additional evidence received by the Tribunal and submitted that these additional evidences could not be produced before the AO as well as before the Ld. CIT(A) as the relevant papers and documents and books of account in respect of M/s. Anu Reebok Stores were seized by the department and thereafter same materials were seized by CBI.HELD THAT:- On a plain reading of the Rule 29, of I.T. Rules, we observe that if the income tax authorities have decided the issue without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. In the present case, as contended by Ld. A.R. the cash books and books of accounts were under the custody of the income tax department and later on was seized by the CBI. Therefore, these documents were not produced before the lower authorities while passing the orders. From the above, we are satisfied that the assessee was prevented by sufficient cause for not presenting the above documents before the AO as well as Ld. CIT(A). We admit the additional evidence in the form of cash book for the assessment year 2012-13 2013-14 and restore the matter back to the file of the AO to consider these additional evidences and pass fresh assessment orders for both the assessment years. Simultaneously, we direct the assessee to furnish the requires details such cash book as submitted before the Tribunal, and as other evidences required by the AO/to be submitted by the assessee for fresh consideration of the issue by the AO. The AO is directed to allow sufficient opportunity of being heard to the assessee - Appeal of assessee allowed.
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2022 (4) TMI 895
Rejection of books of account by applying the provisions of Sec. 145(3) - Computation of business income - applying n.p. rate of 8% on total receipts - HELD THAT:- We found that cost of raw material as % of turnover has increased by around 3% for the reasons stated above. Finance cost as % of turnover has increased by around 5% which is mainly on account of increase in interest payment on loan taken from bank. Other expenses as % of turnover has increased by around 5% which is on account of the fact that Central Excise Commissionerate, Jaipur vide order dated 30.08.2013 raised demand of ₹ 26,74,240/- which was paid during the year and because of applicability of Works Contract Tax in the state of Haryana, the assessee has to pay WCT of ₹ 40,18,047/- during the year. For all these reasons the assessee suffered loss during the year which is fully verifiable. Hence, addition made by the AO and confirmed by Ld. CIT(A) by applying n.p. rate of 8% subject to depreciation is unjustified. Considering the totality of the facts and circumstances of the case as well as judicial precedents followed in this regard, we found merit in the contention of the assessee and we direct to delete the addition made and confirmed by the lower authorities as well as set aside the action with regard to rejection of books of account u/s 145(3) of the Act.- Decided in favour of assessee. Addition of interest income and miscellaneous receipts under the head income from other sources - HELD THAT:- Assessee had shown interest income of ₹ 12,58,998/- on the FDR and miscellaneous receipts of ₹ 2,89,200/-. The AO assessed the same as income from other sources. The Ld. CIT(A) confirmed the action of AO. We found that the interest income earned on FDR is part of business income as FDRs were made for the purpose of business for giving bank guarantees to the awarder of contract. For this purpose assessee has to obtain the FDR from the bank which was pledged to it. From Note No.3.0 of the financial statements we noticed that the FDR of ₹ 1.98 crores has been pledged with the bank for obtaining the bank guarantee. Thus, interest on FDR is part of business income. Also, the FDR were made by utilizing the cash credit limit on which interest is paid to the bank and which forms part of the business expenditure. Thus, the interest income on such FDR which was earned out of the funds placed with the bank by utilizing the bank overdraft limit is to be considered as business income and not as income from other sources. Similarly, the miscellaneous receipts of ₹ 2,89,200/- is from sale of scrap and is part of business income. In earlier years also the same was considered as business income in the assessment made u/s 143(3) which are at page No. 18-25 of the paper book. Hence, the separate addition made by AO and confirmed by Ld. CIT(A) is unjustified. Decided in favour of assessee.
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2022 (4) TMI 894
Accrual of income - subscription monies received in advance - Addition on account of deferred income - CIT-A deleted the addition - whether CIT(A) erred holding that the monies received are shown as deferred revenue by the assessee in the year of receipt and are offered as income in the year when programme is aired when the fact remains that the assessee is following Mercantile System of accounting and the impugned revenue has to be offered only in the current year? - HELD THAT:- Undisputed fact that emerges are that the assessee provide DTH services to various subscribers. The assessee receives subscription amount on quarterly / half-yearly / annual basis and credit the same to deferred income account . From this account, the revenue earned, for each day, are transferred to subscription account which is offered to tax by way of credit to Profit Loss Account. This method of accounting has consistently been followed by the assessee since commencement of business in AY 2008-09. The said method is also in line with the requirement of AS-9 issued by ICAI. The assessee follows the same treatment to input costs. The cardinal principal of taxing the income under mercantile basis of accounting is that the income should have accrued to the assessee. Mere advances could not be brought to tax. The amount lying in deferred income account , in assessee s case, is nothing but advances received for rendering services in future period. Unless these receipts are held to be taxable under the statute, the same could not be brought to tax since only those incomes could be taxed which has accrued to the assessee during the year. In assessee s case, these are unearned revenue and mere advances. The income would accrue to the assessee in future. To clothed the same as the income of the assessee during this year, is bereft of any merits. The argument that the money is never refunded to the subscribers, is not much germane to the issue since the subscription money paid by the subscribers is governed by the contractual terms between the assessee and the subscribers. Nevertheless, the said fact would not alter the position that this income was nothing but mere advances for rendering of services in future. Therefore, the impugned order could not be faulted with. The monies received were shown as deferred revenue in the year of receipt and offered as income in the year when the program is aired. Therefore no illegality or irregularity could be found in the methodology adopted by the assessee in registering the revenue in the year of telecast of programme. We find that the facts in the case of present assessee are quite similar. The subscription monies received in advance are treated as deferred income and offered to tax on day to day basis which is correct methodology of revenue recognition under mercantile system of accounting. Therefore, the submissions that this case law would not apply to the case of the assessee, could not be accepted. - Decided against revenue.
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2022 (4) TMI 893
Addition u/s 68 - Non compliance of provisions of section 142(3) - bogus sale consideration received on sale of shares of listed companies - Denial of claim of exemption u/s 10(38) and commission paid on the sale transaction - HELD THAT:- On material made available to the assessee vis- -vis provisions of section 142(3) of the Act which casts a mandatory statutory procedural compliance requirement on the Ld. AO in completing the assessment proceedings which otherwise may vitiate the assessment itself, it necessitates us to remand back the present case to the Assessing Officer for its appropriate adjudication by respectfully considering the observation made by the Hon ble Madras High Court in case of Mrs. Manish D. Jain (HUF) [ 2020 (12) TMI 740 - MADRAS HIGH COURT] on the availability of material to the assessee. Thus respectfully following the directions given in Para 8 in the judgment of Hon ble Karnataka High Court in the case of Chandra Devi Kothari [ 2015 (2) TMI 1313 - KARNATAKA HIGH COURT] and the order of co-ordinate bench of ITAT, Bangalore in the case of Shri Suresh J. Kothari (HUF) [ 2019 (7) TMI 1918 - ITAT BANGALORE] we set aside the impugned order passed by Ld. CIT(A) and Ld. AO and restore the matter back to the file of the Ld. AO with the direction to comply with the mandatory statutory requirements of section 142(3) of the Act failing which may vitiate the assessment itself. AO has to reconsider the issue afresh after furnishing to the assessee all the material relied upon by him/her while passing the assessment order. Appeal of the assessee is allowed for statistical purpose
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2022 (4) TMI 869
Addition u/s 69C - reference to DVO u/s 142A for the purpose of Section 69C - DVO estimated the value of the land less than 10% of the value adopted by the Stamp Valuation Authority, therefore, AO proceeded to treat the difference as unexplained expenditure u/s 69C - objection of the assessee regarding erroneous reference to the DVO, it was submitted that the Assessing Officer was not empowered to refer the matter to DVO, where the assessment was being made u/s 69C - HELD THAT:- Revenue has not brought on record that mentioning of Section 69C was on account of any typographical error. It is also clear from the assessment order that the Assessing Officer had referred the issue of market value of the property in question u/s 142A - as per Section 142A such reference can be made to ascertain the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or any other valuable article referred to in section 69A or Section 69B of the Act. There is conspicuous exclusion of Section 69C. In the present case, reference u/s 142A was not made regarding ascertaining the correct market value of the investment in property. But, it was in fact for the purpose of ascertaining expenditure which the assessee made on the purchases. We find merit into the contention of the assessee that the reference to DVO u/s 142A for the purpose of Section 69C is not valid. Action of the CIT(Appeals) to treat the reference u/s 142 for the purpose of Section 69B - Hon ble Delhi high Court, rendered in the case of CIT Vs. Aar Pee Apartments (P) Ltd.[ 2009 (8) TMI 256 - DELHI HIGH COURT] has held that from the reading of sub-section (1) of Section 142A, it is clear that legislature referred to the provisions of Section 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like this. What is not included by legislature and rather specifically excluded, cannot be interpreted by the Court through the process of interpretation. The only remedy is to amend the provision. It is not the function of the Court to legislate or to plug the loopholes in the law. In the light of the above binding precedent the action of the learned CIT(Appeals) in treating the addition made by the Assessing Officer u/s 69C as have been made u/s 69B is contrary to the law laid down by the Hon ble Jurisdictional High Court. Therefore, the impugned order is therefore set aside. The addition made u/s 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted. Hence, impugned addition is hereby deleted. Grounds of appeal taken by the assessee are allowed accordingly.
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2022 (4) TMI 868
Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - voluntary disallowance made u/s 14A - CIT(A) directed the AO to exclude the investments made by the assessee in subsidiary companies after proper verification from the calculations in the Rule 8D(2) r.w. section 14A in computing the regular income - HELD THAT:- AO has not recorded any satisfaction as to how the disallowance voluntarily made by the assessee is not correct and moreover, AO has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. DR could not controvert the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] which was followed by the Coordinate Benches of the Tribunal in assessee s own case for the assessment year 2013-14 [ 2017 (5) TMI 1702 - ITAT CHENNAI] to decide the issue in favour of the assessee. Thus, respectfully following the decision of the Coordinate Benches of the Tribunal in assessee s own case for the assessment year 2013-14 as well as the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), we hold that the Assessing Officer was not justified in making disallowance under section 14A of the Act. Thus, the ground raised by the assessee is allowed. Exclusion of the disallowance under section 14A for disallowance u/s 115JB - HELD THAT:- As in the case of Sobha Developers Ltd. v. DCIT [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] wherein, it was held that the disallowance made under section 14A of the Act could not be added to book profits of the assessee under section 115JB. Royalty payment as revenue expenditure - HELD THAT:- Against the disallowance of royalty payment by following the decisions of the Tribunal in assessee s own case for the assessment years 2012-13 and 2013-14, the ld. CIT(A) directed the Assessing Officer to allow the royalty payment by treating it as revenue expenditure. Thus, we find no infirmity in the order passed by the ld. CIT(A). Just because the Revenue has filed an appeal against the order of the Tribunal before the Hon ble Madras High Court, we cannot take a different view until and unless the decision of the Tribunal has been reverted or modified. Accordingly, the ground raised by the Revenue stands dismissed.
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Customs
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2022 (4) TMI 892
Classification of imported goods - two vessels declared as Excursion Boat Monterey 180 FSW/Volvo Penta 3.0 GL; 135 HP - to be classified under tariff item 8901 1030 or under tariff item 8903 9990 of the First Schedule to Customs Tariff Act 1975? - HELD THAT:- Assessment, the most basic objective of customs law, is the application of the prescribed rate of duty to the value of imported goods. Unlike valuation, based on a conceptual articulation attended by an exhaustive string of sequential options that may be leveraged to discard value declared by the importer before substitution by an appraised value without compromise to the integrity of statutory intent, most appropriate fitment for classification can be implemented only by the default adoption of acceptable declaration in bill of entry to be disturbed only by independent, and not comparative, fitment of the description corresponding to tariff item canvassed by customs authorities. The impugned order being nothing other than mere endorsement of the finding of the original authority, it is to the latter that we turn to for ascertainment of discharge of onus mandated by the Hon ble Supreme Court. The original authority appears to have relied upon some definition of excursion boats which neither answers as a description of the impugned vessel nor is validated to assist, by revealed provenance, in judicial determination - Furthermore, the contents - pictorial and verbal - of the promotional material appear to have had such undue influence as to gloss over its pertinence to Monterey 180 FSW therein even as it purports to advert only to Monterey 180 FS which may well be the sports version of a glamourless transport vessel. The original authority appears to have indulged in conjecture which responsible discharge of authority to assess does not permit. With the failure to establish the appropriateness of the specific enumerations in heading 8903 of First Schedule to Customs Tariff Act, 1975 or of the enumerated specific descriptions corresponding to tariff items in heading 8903 of First Schedule to Customs Tariff Act, 1975, the description sought by the appellant does not have to be compared with that proposed by customs authorities. The declared classification prevails by default without going into its merit; of course, the capacity of the imported vessels for carrying up to eight passengers and some luggage, implying unsuitability for endurance and speed that are hallmarks of vessels for sports and pleasure, immunizes the declaration in the bills of entry from being discarded. The description and the classification declared in the bill of entry cannot be faulted - appeal allowed.
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2022 (4) TMI 891
Valuation of imported goods - crude palmolein oil - whether ullage report or the shore tank report should be reckoned for determining the customs duty? - HELD THAT:- It is now well settled by the Supreme Court and also accepted by the Board that when liquid cargo is imported, shore tank quantity should be considered for assessment of duty and not ullage report. The previous orders of this Tribunal followed the same. In some cases the orders of this Tribunal were also not challenged by the Revenue. The learned Commissioner (Appeals) has followed the order of this Tribunal as he is bound to as per judicial discipline. The argument of the Revenue is that the Commissionerate has now decided to challenge one of the previous orders of this Tribunal. Measurement in the shore tank being taken after cargo is settled - HELD THAT:- This Tribunal had held that the measurement should be taken after the cargo is settled. Revenue s contention is that there was no such stipulation in the Board s circular. If a liquid is poured into a container, say water is filled in a bucket under a tap with high pressure, there will be some turbulence when filling and bubbles will come up. The quantity of the water in the bucket can only be measured after bubbles settle and the turbulence stops. Similarly, when oil is pumped using heavy duty pumps from the ship to the tanks, some turbulence ensues and some froth will also develop. Needless to say that the quantity of the liquid can only be measured accurately only after the liquid settles. Accurate dip measurement in the tanks and the temperature at the time of such measurement which form the basis for calculating the quantity of the liquid are possible only after the liquid settles. It is not understood how the Revenue can find fault on any direction that the measurements be taken before the turbulence ends and liquid settles. Evidently, any measurement before the liquid settles is likely to be erroneous resulting in wrong quantities being recorded than what is present in the tanks. Revenue cannot seek to collect duty based on such quantities. The commissioner has correctly mentioned in the public notice that the dip measurement must be taken after liquid is settled. Appeal dismissed - decided against Revenue.
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2022 (4) TMI 890
Maintainability of Advance Ruling application - time limitation - classification of goods - aerosol valve - to be classified under 8481 or 8424 or 9616? - HELD THAT:- It is observed that the instant application relates to on-going activity of import of aerosol valves, which is included in the portfolio of activities being carried out by the applicant for last several years. In view of lack of clarity regarding the appropriate classification of the goods being imported by them, the question posed for ruling is regarding the correct classification of the aerosol valves , with the applicant contending that the most appropriate classification is sub-heading 8424 89 90, with possibility of it being classified under Heading 8481, but definitely not under 9616, as has sometimes been contended by the department but not pressed. In the instant case of on-going activity, a ruling by this Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to Section 28-I(2) of the Customs Act - it is found that proviso one is not applicable in the instant case on the ground that it has been so claimed by the applicant and confirmed by the concerned Commissioner of Customs and DRI, Regional Unit, Jaipur. The second proviso prescribes that this Authority shall not allow an application, where the question raised in the application is same as in a matter decided already by the Appellate Tribunal or any court . As mentioned, in the application, the applicant had, cited reference to three CESTAT cases, claiming that certain judicial decisions put the aerosol valve in category of 8481 or 8424. However, in their additional submission, they have clarified that the impugned goods are different from those which were subject matter of the said three Tribunal decisions. Classification of goods - aerosol valve - HELD THAT:- The applicant has described various components of the goods in question as, valve, actuator, valve cup, stem, stem gasket, spring, housing and dip tube. Moreover, applicant has furnished copies of few bills of entry filed by them wherein items under import had been declared as aerosol valve, components of aerosol valve (actuator, diptube) etc. In view of the forgoing, it is observed that the goods (sample of which has been supplied by the authorized representative of the applicant), in respect of which ruling on classification has been sought, is not a simple or mere valve. Accordingly, for the impugned product, classification under Tariff Heading 8481 does not appear appropriate. As regards Heading 9616, it refers inter alia to, Scent sprays and similar toilet sprays, and mounts and heads therefore . I find that Collins dictionary defines scent spray as a perfume that comes in aerosol bottle. Having gone through the product description given by the applicant and viewed the sample provided to this office, I find that the product in question is a component of spray mechanism, capable of spraying fluid (aerosol) from a bottle/container. Therefore, I am of the considered opinion that goods in question can also be mounted on bottle/can of Scent spray for delivery of Scent/perfume which can be containerized under pressure. Thus, when the goods in question are used as mounts and heads for dispersing or spraying of Scent, then in the light of Rule 1 and 6 of the General Rules for the Interpretation of Import Tariff, these would be classifiable under Heading 9616 - thus, in the instant case, the impugned goods with general purpose use do not merit classification under Heading 96.16, which has very precise scope. The third Heading 8424 covers, inter alia, mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders. The features of the goods in question are consistent with the scope of the said Heading 8424, inasmuch as these are components of hand operated mechanical appliances meant for spraying liquids (aerosols). Therefore, impugned goods merit classification under Heading 8424 in the light of Rule 1 and 6 of the General Rules for the Interpretation of Import Tariff; and specifically under sub-heading 8424 89 90. Application disposed off.
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Corporate Laws
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2022 (4) TMI 889
Sanction of Scheme of Demerger - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- The objections/observations to the Scheme received from RoC RD have been adequately replied by the Petitioner Companies and hence, there is no impediment in approval of the Scheme. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (4) TMI 888
Wages/salaries of the workmen/employees during the CIRP period - amount due and payable to the respective workmen/employees towards Pension Fund, Gratuity Fund and Provident Fund - waterfall mechanism - HELD THAT:- Under the IB Code, the workmen dues have been duly protected and the provident fund, gratuity and pension fund have been excluded from the liquidation estate assets (Section 36(4) of the IB Code). Furthermore, as per Section 53 of the IB Code, the workmen dues are given the top priority in the waterfall mechanism. The statutory provisions under the IB Code and the legislative history, the claims of the workmen/employees towards wages/salaries prior to CIRP and during the CIRP are required to be considered - It cannot be disputed that as per Section 5(13) of the IB Code, insolvency resolution process costs shall include any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern. It is also true that Section 20 of the IB Code mandates that the interim resolution professional/resolution professional is to manage the operations of the corporate debtor as a going concern and in case during the CIRP the corporate debtor was a going concern, the wages/salaries of such workmen/employees who actually worked, shall be included in the CIRP costs and in case of liquidation of the corporate debtor, dues towards the wages and salaries of such workmen/employees who actually worked when the corporate debtor was a going concern during the CIRP, being a part of the CIRP costs are entitled to have the first priority and they have to be paid in full first as per Section 53(1)(a) of the IB Code. While considering the claims of the concerned workmen/employees towards the wages/salaries payable during CIRP, first of all it has to be established and proved that during CIRP, the corporate debtor was a going concern and that the concerned workmen/employees actually worked while the corporate debtor was a going concern during the CIRP. The wages and salaries of all other workmen/employees of the Corporate Debtor during the CIRP who actually have not worked and/or performed their duties when the Corporate Debtor was a going concern, shall not be included automatically in the CIRP costs. Only with respect to those workmen/employees who actually worked during CIRP when the Corporate Debtor was a going concern, their wages/salaries are to be included in the CIRP costs and they shall have the first priority over all other dues as per Section 53(1)(a) of the IB Code. In the present case, the RP/Liquidator has seriously disputed that during the CIRP, the Corporate Debtor was a going concern. It is seriously disputed that the respective appellants workmen/employees employed at Dahej Yard and Mumbai Head Office actually worked during the CIRP. It is true that while submitting the claims towards CIRP costs, the RP has not submitted the claims towards the wages/salaries of the appellants, however, still the claims submitted/to be submitted by the appellants will have to be adjudicated upon and considered by the Liquidator and the Liquidator has to adjudicate and consider, (i) whether the Corporate Debtor was a going concern during the CIRP; (ii) how many workmen/employees actually worked during the CIRP while the Corporate Debtor was a going concern - If on adjudication of the claims made by the respective workmen/employees, if it is established and proved that during CIRP, the Corporate Debtor was a going concern and the concerned workmen/employees actually worked during the CIRP when the Corporate Debtor was a going concern, the wages and salaries of such workmen/employees to be included in the CIRP costs as defined under Section 5(13) of the IB Code and they will have to be paid such wages/salaries as per Section 53(1)(a) of the IB Code as part of the CIRP costs in full before making any payment as per priorities mentioned in Section 53(1) of the IB code. Dues of the workmen/employees towards Provident Fund, Gratuity Fund and Pension Fund - HELD THAT:- Section 36(4)(iii) of the IB Code specifically excludes all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund , from the ambit of liquidation estate assets . Therefore, Section 53(1) of the IB Code shall not be applicable to such dues, which are to be treated outside the liquidation process and liquidation estate assets under the IB Code. Thus, Section 36(4) of the IB Code has clearly given outright protection to workmen s dues under provident fund, gratuity fund and pension fund which are not to be treated as liquidation estate assets and the Liquidator shall have no claim over such dues - the concerned workmen/employees shall be entitled to provident fund, gratuity fund and pension fund from such funds which are specifically kept out of liquidation estate assets and as per Section 36(4) of the IB Code, they are not to be used for recovery in the liquidation. There are disputed questions, whether in fact the IRP/RP managed the operations of the corporate debtor as a going concern during the CIRP and there is a serious dispute whether Dahej Yard was operational during the CIRP or not and there is a serious dispute that the concerned workmen/employees of the Dahej Yard and the concerned employees of the Mumbai Head Office actually worked during the CIRP or not and therefore it is directed that let the appellants submit their claims before the Liquidator and establish and prove that during CIRP, IRP/RP managed the operations of the corporate debtor as a going concern and that they actually worked during the CIRP and the Liquidator is directed to adjudicate such claims in accordance with law and on its own merits - If it is found that in fact the IRP/RP managed the operations of the corporate debtor as a going concern during the CIRP and the concerned workmen/employees actually worked during CIRP, their wages and salaries be considered and included in CIRP costs and they will have to be paid as per Section 53(1)(a) of the IB Code in full before distributing the amount in the priorities as mentioned in Section 53 of the IB Code. The present appeal is partly allowed.
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2022 (4) TMI 887
Wilful disobedience - Contempt against the Liquidator/the Respondent - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Order of this Tribunal directing the Liquidator to proceed as per terms of Y Shivaram Prasad (Supra) is dated 21/05/2019. In this interim period it is an admitted fact that there was no Scheme which was formalised under Section 230 of the Act. It is the main case of the Appellant that the Liquidator had acted in breach of the Order dated 29/01/2020 passed by the Adjudicating Authority whereby the Learned Adjudicating Authority has recorded that pending any decision on any proposed Scheme being accepted by the Liquidator, the sale of asset of the Corporate Debtor shall only confirm after due permission from this Bench. An offer of settlement was given by the Financial Creditor on 17/08/2019 with a specific time frame extending upto 31/07/2020. It is clear that despite the extended time granted by the Hon ble High Court of Delhi, wherein time was extended up to 31/07/2020 still the Corporate Debtor did not pay the amount. Admittedly the Scheme under Section 230 of the Act was never formalised; the date extended by the Hon ble High Court of Delhi was only up to 31/07/2020; that more than two years has lapsed subsequent to the Order of this Tribunal; that it is a Section 10 Application under the Code filed by all three Companies together; that the Order dated 15/07/2020 has attained finality, the Liquidator has only complied with the terms of the Order dated 15/07/2020 and lastly there is no Scheme which has been filed till date under Section 230-232 of the Act; it cannot be said that the action of the Liquidator in selling the asset by public auction, be termed as contempt or any breach of the Order of the Adjudicating Authority. Appeal dismissed.
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2022 (4) TMI 886
Seeking to transfer the plot in question in the name of auction purchaser - recovery of any of its prior dues, it may prefer its claim in appropriate Form before the Liquidator - HELD THAT:- Insofar as the dues of the Appellant of ₹ 40,50,108/- (claimed As ₹ 41,43,922/- in Appeal), learned Counsel for the Appellant submits that in respect of the said dues, the Appellant is to take steps as permitted by the Adjudicating Authority in the impugned order by filing claim before the Liquidator. Parties are ad idem on the question with regard to prior dues of the Appellant in respect of the Plot, the same cannot be put as a condition for transfer of the Plot. However, the transfer of Plot is to be considered by the Appellant as per the terms and conditions of the Transfer Policy of March 2009, which has been brought on record along with the Appeal paper-book. The order of NCLT allowing the Application filed by the Liquidator regarding transfer of Plot in favour of auction purchaser does not obviate the consideration of transfer of Application as per the existent Policy namely the Policy Procedure for Institutional Property Management March, 2009. The Adjudicating Authority ought to have issued direction to consider the Transfer Application for transferring the auctioned Plot in accordance with the existent Policy - the direction of the Adjudicating Authority issued in paragraph 8(a) has to be read to mean that Adjudicating Authority directed the Appellant to consider the transfer of the Plot and expression shall transfer need not be read to mean that the Appellant has to transfer the Plot without the Respondent complying with the requirements of the Transfer Policy. The Application dated 16.02.2022 filed by the Respondent in terms of existent Transfer Policy be considered by the Appellant on merits in accordance with law - Appeal disposed off.
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2022 (4) TMI 885
Initiation of CIRP - Operational Creditor - Filing of application jointly instead of individually - Scope of section 8 read with section 9 - NCLT rejected the application - HELD THAT:- In the instant case it is the case of the Appellants that they had rendered consultancy services which is completely denied by the Corporate Debtor. The material on record evidences that the services of the First Appellant was terminated on the ground that he was engaged in business agreements with other competing companies. An Operational Creditor can apply himself or through a person authorised to act on behalf of the Operational Creditor. In the instant case the contention of the Appellant that he is acting on behalf of the Second Appellant who is also arrayed as an Operational Creditor, has not established his position with or in relation to the Corporate Debtor seeking the payment of dues alleged to be payable, keeping in view that there is no documentary evidence with respect to Consultancy Services having been hired by the Corporate Debtor as there was no Agreement/letter which deals with any Consultancy - there are no merit in the submission of the Appellant that a Joint Application is maintainable that the Corporate Debtor hired the services of the 2nd Appellant and that the Appellant is acting on behalf of the 2nd Appellant, specifically in the light of the termination letter issued by the Corporate Debtor, terminating the service of the 1st Appellant, in his capacity as an Employee . It is clear from the provisions of Section 8 and 9 of the Code, that unlike under Section 7, a Notice under Section 8 is to be issued by an Operational Creditor individually and the Petition under Section 9 has to be filed by the Operational Creditor individually and not jointly. Individual Operational Creditor will have to issue their individual claim notice under Section 8 of the Code. Each claim will vary and would be different. The date of notice under Section 8 would also be different and vary on a case to case basis. The notices have to be issued in specific forms filling separately Form 3 and Form 4. Petition under Section 9 in the Form would contain separate individual data - A bare perusal of Form 3 4 read with Sub-Rule (1) of Rule 5 and Section 8 of the Code, it is clear that an Operational Creditor can apply himself or through a person authorised to act on behalf of the Operational Creditor. At the cost of repetition the person who is authorised to act on his behalf, is required to state his relation and his position vis a vis the Operational Creditor. This Tribunal is of the earnest view that there is no illegality or infirmity in the order of the Adjudicating Authority - Appeal dismissed.
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2022 (4) TMI 884
Approval of Resolution Plan - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is not disputed between the parties that Resolution Plan of Appellant stood approved by the CoC by majority of 98.55% voting shares. The approval of the Resolution Plan was well within CIRP period as extended by the Adjudicating Authority. It is on the record that CIRP period of the Corporate Debtor was to expire on 28.07.2021. Thereafter, eight weeks extension was granted by the Adjudicating Authority vide order dated 26.07.2021. During the CIRP, two Resolution Plans were placed for approval before the CoC and the Resolution Plan of the Appellant received 98.55% voting shares. An Application for approval of the Resolution Plan was filed by the Resolution Professional on 24.09.2021. The Letter of Intent was issued to the Appellant on 21.09.2021. It is not the case of any of the parties that Respondent No.3 in the CIRP had given any Expression of Interest. The CIRP period as per pleadings of the Resolution Professional came to end on 26.09.2021. Application for approval of the Resolution Plan was already filed and pending consideration before the Adjudicating Authority. The CoC in its meeting dated 18.12.2021 has clearly refused to consider the plan of Respondent No.3 after over of CIRP which fact was communicated by the Resolution Professional to the Respondent No.3. A perusal of the order of the Adjudicating Authority impugned in the present Appeal indicate that the Respondent No.3 has represented before the Adjudicating Authority that CoC is of the view that it could be taken into consideration subject to the outcome of this Application and directions issued by this Bench . The CoC could not as per existing law, consider the Resolution Plan of Respondent No.3 after approval of the plan of the Appellant and after over of the CIRP. The CoC having approved the plan of the Appellant had rightly taken a decision on 18.12.2021 to communicate the Respondent No.3 that plan of Respondent No.3 cannot be considered. There is no valid reason given by the Adjudicating Authority for permitting the consideration of plan of Respondent No.3. The consideration of the Resolution Plan of Respondent No.3 shall be breaching both timeline as well as the finality of the Resolution Plan of the Appellant which was approved by the CoC on 26.08.2021. There is no substance in the submission of the Counsel for the Respondent No.3 that plan of Appellant was also not submitted within the time fixed. There was no valid reason indicated in the order of the Adjudicating Authority dated 18.01.2022 for permitting the CoC to consider the Resolution Plan of the Respondent - Appeal allowed.
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2022 (4) TMI 883
Seeking direction to the suspended directors / the Appellants herein to cooperate and provide signed copy of the financial statements - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The submissions of the Learned Counsel for the Appellants that it is the RP who has to sign Financial Statement is untenable, keeping in view the facts and circumstances of the attendant case as it is not disputed that the Appellants had signed the first three quarters of the Financial Year and are now objecting to sign the last quarter raising some clarifications which have already been addressed to by the RP and the Statutory Auditor (who is the same auditor who had audited the Financial Statements/Accounts for the past three years of the Corporate Debtor company) - Section 19(2) of the Code clearly specified that the personnel of the Corporate Debtor, as promotors or any other persons are required to assist the RP failing which an Application can be filed before the Adjudicating Authority seeking direction for co-operation. This Tribunal is of the considered view that the circular dated 06.03.2020 relied upon by the Appellants provides only for the procedure of filing the Forms. The circular does not anywhere specify that the Financial Statement are not to be signed by the Directors as required in the Companies Act, 2013. The emails and the communications on record evidence that the RP and the statutory auditor had prepared all the information as demanded time and again by the Appellants, requesting them to sign the Financial Statements in order to enable the RP to proceed in accordance with law. There are no illegality in the well reasoned order of the Adjudicating Authority as it is not a fit case, in the interest of justice and to avoid any further delay in this time bound proceedings, in remitting the matter to the Adjudicating Authority - appeal dismissed.
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2022 (4) TMI 882
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - barred by time limitation or not - HELD THAT:- Admittedly the date of default is 30.06.2014 and the letter informing the Corporate Debtor about the accounts having become NPA is 13.11.2014. In the instant case it is not disputed by the Appellant that First OTS letter offered by the Corporate Debtor was dated 06.06.2018 though it is the case of the Respondent that the OTS proposal is 01.08.2018. Be that as it may the First OTS proposal is beyond the period of three years and, therefore, it does not aid the case of the Appellant that this OTS is an acknowledgement of debt as provided for under Section 18 of the Limitation Act, 1963 as it is long after the expiry of the prescribed period of three years of limitation - While the OTS Proposals establish an existence of jural relationship between the Bank and the Corporate Debtor, the facts remains that First letter of the OTS proposal was made in June, 2018, whereas the prescribed period of three years have already lapsed in June, 2017. The Balance Sheet for the Year ending 31.03.2017 which is within three years from the date of NPA i.e. 13.09.2014 shows that there is an amount of ₹ 366953917.45 depicted under secured term loan vis a vis a sanction limit of ₹ 3383 lakhs. The amount in default is shown to be ₹ 3692 lakhs. Expression of default has been defined in Section 3(12) of the Code meaning non-payment of Debt when a whole or part or any part or instalment of the amount of debit has become due and payable and is not paid by the Debtor or the Corporate Debtor, as the case may be. Section 18 of the Limitation Act, 1963 comes into play every time when the principal borrower/Corporate Debtor, as the case may be, acknowledged their liability to pay the debt, however, such acknowledgement must be before the expiration of the prescribed period of limitation, which in the instant case is within three years period. This Tribunal is of the considered view that the Appellant having exercised their legal right to file an IA before this Tribunal to bring on record the Balance Sheet for the financial year ending 2016-17, instead of filing the same before the Adjudicating Authority, it cannot be said to be nonest specially in the light of the fact that the question of limitation per se has been argued/pleaded by the Appellant herein before the Adjudicating Authority in terms of acknowledgement of debt under Section 18 of the Limitation Act, 1963 vide OTS proposals. This Tribunal holds that Debt has been duly acknowledged in the Balance Sheet for the Year 2016-17 which is also duly prepared and authenticated by the Auditors Report amounting to Admission of Liability and, therefore, satisfies the requirements of liability for a valid acknowledgement under Section 18 of the Limitation Act, 1963. The matter is remitted back to the Adjudicating Authority to decide the admission of the Application in accordance with Law as expeditious as possible - Appeal allowed.
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2022 (4) TMI 881
Seeking direction to issue RC Book after entering Shri. S.K. Pandyan, Proprietor of M/s. S.K., Traders in respect of Vehicle - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The property of the Corporate Debtor has been sold with existing and future encumbrances whether known or unknown to the Liquidator. The Applicant who is very well aware of the said terms and conditions imposed by the Liquidator has participated in the E-Auction Sale and has emerged as the successful bidder. At this point of time, after paying the entire sale consideration, the Applicant cannot invoke Section 238 of IBC, 2016 or Section 60(5) of IBC, 2016 seeking directions against the Respondent to register the vehicle in their favour. Further, eventhough in the Application it has been averred that a charge has been created as against the said vehicles in the name of Cholamandalam Investment Finance Company, for the reasons best known to the Applicant, they have not impleaded the said Cholamandalam Investment Finance Company as party Respondent in the present Application. Since the name of Cholamandalam Investment Finance Company is reflected in the RC Book, all parties are aware of the charges at the time of auction - In the present case, since the property of the Corporate Debtor has been sold on 'as is where is basis', the Applicant ought to have approached the proper authority seeking directions against the 2nd Respondent. Application dismissed.
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2022 (4) TMI 880
Levy of maximum penalty - initiating insolvency proceedings against the corporate debtor with a malicious intent for the purpose other than resolution of insolvency of the corporate debtor - seeking direction to respondents to cease and desist from causing disruptions in the functioning of the applicant/resolution professional - seeking direction to respondent to provide available evidence of collusion between the respondents No. 1-3 (Manish Soni, Pankaj Kumar Sahu and Vivek Kumar) - HELD THAT:- It is a fact that the Respondent No. 1, Mr. Manish Soni has filed the Application under Sec. 9 of IBC for his 3 months' unpaid salaries amounting to ₹ 3,48,000.00 only calculated @ ₹ 1,16,000.00 per month and the corporate debtor remained absent in the proceedings allowing the petition to be admitted ex-parte but the RP's allegation against Respondent No. 1 that, he in collusion with respondent No. 2 and 3 and in connivance with the Suspended Board of Management, has initiated insolvency proceedings against the corporate debtor with a malicious intent for the purpose other than resolution of insolvency of the corporate debtor could not be proved with materials to the satisfaction of this Bench. It is found from the materials, papers, and submissions of the Transaction Auditor and the RP that the R6 7, Suspended Board of Management/Ex Directors are still not cooperating, as required under the code of the IBC, to the RP for completion of the CIRP in time. The RP in the meantime has filed other two IAs for preferential transactions and fraudulent trading or wrongful trading under the Sections 43 and 66 of IBC respectively. Hence the issues raised relating to the R6 R7 shall be disposed of along with these two IAs separately. There is no much substance left at this time to proceed further in the matter - Petition disposed off.
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Service Tax
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2022 (4) TMI 879
Reverse charge mechanism - Banking other financial services - recipient of services or not - services provided by the Foreign Banks situated outside India - extended period of limitation - HELD THAT:- Issue notice, returnable on 27-10-2021. The parties are at liberty to file written submissions not exceeding five pages before the next date of hearing.
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2022 (4) TMI 878
Scope of SCN - demand has been raised in the category of Cleaning Services and Erection, Commissioning and Installation services which were never proposed in the SCN - no break-up of the tax amount demand has been provided in the impugned order - renovation of hospital under the category of Commercial or Industrial activity - Works Contract Service - Suppression of facts or not - extended period of limitation - HELD THAT:- Nowhere in the entire Show Cause Notice (SCN), the demand of service was proposed in the category of Cleaning Services and Erection, Commissioning and Installation services. However, the demand has been confirmed under the category of Cleaning services as is evident from para 4.56 of the impugned order. Further the demand has also been raised in the category of Erection, Commissioning and Installation services - The Hon ble Supreme Court in the case of CCE VERSUS SHITAL INTERNATIONAL [ 2010 (10) TMI 19 - SUPREME COURT] has held that the Revenue cannot be permitted to build up a new case which was not taken in the Show Cause Notice which is the foundation of the proceedings against the assessee. Therefore, the demand in the aforesaid categories cannot be sustained and thus, set aside. It is further found that vide specific exemption notification being Notification No.24/2009 dated 27.07.2009, introduced to exempt the activity of maintenance or repair of road retrospectively for the period from 16.06.2005 onwards, a fact that the Ld. Commissioner has completely ignored and therefore, the demand is liable to be set aside - the Ld. Commissioner has observed in para 4.9 of the OIO that since the assessee has not chosen to seek registration under the said category of works contract service, the services would be classifiable under other categories as per SCN even though the same is classifiable under Works Contract Service. In the case of PES ENGINEERS PVT. LTD VERSUS CCE ST, HYDERABAD-I AND (VICE-VERSA) [ 2017 (7) TMI 687 - CESTAT HYDERABAD] the issue involved for demand pertaining to the period January 2005 to March 2012 under Erection Commissioning and Installation Service. The Tribunal has held that the services were classifiable under Works Contract Service and not Erection Commissioning and Installation Service , demand could not be sustained. Further, in the case of M/S. URC CONSTRUCTION (P) LTD. VERSUS COMMISSIONER OF CENTRAL, SALEM [ 2017 (1) TMI 1363 - CESTAT CHENNAI] wherein there was an identical issue, amongst others, whether demand could be upheld for the period June 2007 to September 2008 under CICS, in case where the construction service rendered by the assessee also involved supply of materials and the classification of Works Contract Services was not proposed in the SCN for raising demand. The demand raised in the impugned order cannot be sustained and hence, set aside. In so far as the Revenue s appeal is concerned, even if the contention that the services for road were classifiable under Repair or Maintenance service, in that case also the same were wholly exempted vide Notification No.24/2009 dated 27.07.2009 retrospectively for the period from 16.06.2005 onwards. Hence, no demand can be sustained. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 877
Recovery of excess availed CENVAT Credit - higher valuation of pan masala at the end of supplier process amounting to manufacture or not - re-determination of value at ₹ 324 per kg instead of ₹ 1784 per kg as declared by them - repacking of pan masala into smaller pouches and exporting them - benefit of area based exemption - N/N. 71/2003-CE dated 09.09.2003. Whether the officers of DGCEI have the power to re-determine the assessable value? - HELD THAT:- The assessment of duty which includes determining the classification of the goods, their valuation, the exemption notifications that may apply and determining the duty payable is the responsibility of the assessee itself as per Rule 3. The assessee is also required to file monthly returns with the Superintendent of the Central Excise [Rule 12 (1)] which can be scrutinised by the proper officer for correctness [Rule 12(3)]. While the proper officer is not defined in this Rule, since the return is to be filed with the Superintendent of Central Excise, such officer can only be understood to be the proper officer empowered to scrutinise the returns for correctness. Any Central Excise officer may exercise the powers and discharge the duties conferred or imposed under this Act on any other Central Excise Officer who is subordinate to him [Section 12E]. Evidently, the Rules have not conferred any powers on the officers of DGCEI to either assess the duty or to scrutinize the returns for their correctness. Therefore, the officers of DGCEI have no power either to assess the duty or to scrutinize the self assessment by the assessee. If on scrutiny, the assessment by the assessee is found to be incorrect and the assessee does not agree with the officer‟s assessment, there are two options. One is for the department to file an appeal with the Commissioner (Appeals). It has been held by the Constitution Bench of Supreme Court disposing of a batch of matters involving Customs, Excise and Service Tax in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] that all assessments including self-assessments can be appealed before the Commissioner (Appeals) - the other option is by issuing a Show Cause Notice under Section 11A. This option is restricted by WHO, WHEN and WHY can an SCN be issued. As far as WHO is concerned, it has to be the Central Excise officer. As far as WHEN is concerned, it is within the normal period of limitation or extended period of limitation of five years as applicable. As far as WHY is concerned, the SCN can be issued only if there is a non-levy, short levy, non-payment or short payment or erroneous refund of the duty. Section 11A does not provide for issue of notice so as to modify the assessment in any other way. In this case, the value of the goods cleared by both Blue Whale and Unicorn was proposed to be reduced by the officers of DGCEI who do not have the power to even scrutinize the returns filed by the assessee. They propose to revise the assessable value to a lower amount which is also not provided for under Section 11A - DGCEI also proposed to revise the goods cleared by Blue Whale for export without filing any appeal against the assessment of the Shipping Bill before Commissioner (Appeals). Classification and valuation are part of the assessment of duty. Valuation of the goods cleared by the supplier cannot be modified by the officers at the end of the recipient so as to reduce the CENVAT credit. It has been held not only in a catena of judgements but it has also been clarified by the Board in Circular dated 01.02.2016 that when Central Excise Duty has been paid, CENVAT credit on the same cannot be questioned at the receiver‟s end. Learned Commissioner was, therefore, correct in rejecting the proposal to deny CENVAT credit because undisputedly the duty was paid and the goods were received and they were used in the manufacture of the final products by Blue Whale. Assessable value of the final products exported by Blue Whale - HELD THAT:- While Central Excise Act and the Customs Act provide for assessment based on transaction values subject to some exceptions, the SCN has been issued by DGCEI replacing the transaction value with values which it considers fair and proper assuming not only the power of deciding what is a fair assessable value but also seeking to deny CENVAT credit available to the buyer by re-determining the value at the end of the supplier contrary to not only to the judicial precedents but also Board‟s Circular. This is beyond the powers conferred even on the Superintendent of Central Excise who has the mandate to scrutinise returns, let alone officers of DGCEI who have no jurisdiction even to scrutinise the Central Excise Returns for correctness. Appeal dismissed.
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CST, VAT & Sales Tax
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2022 (4) TMI 876
Validity of orders passed - Extension of tenure of the existing Technical Member of the West Bengal Taxation Tribunal - extension until formal appointment of Technical Member by the Government - HELD THAT:- It is found that no facts, legal provisions, existence of any ground for issuance of interim direction has been noted and in one sentence, without giving any further date in the matter, the stay has been granted. Though, consent of the parties has been mentioned in the impugned order but the learned Counsel for the High Court Administration was not present when the order was passed. Even otherwise, a strong submission has been raised before this Court that consent given against the provision of law is of no consequence and on the basis of such a consent, an order contrary to law could not have been passed. The issue of maintainability of writ petition itself has been raised by the appellant referring to Section 19 of the West Bengal Societies Registration Act, 1961 which provides for authorization by the governing body to the President, Secretary or any office bearer for suing on behalf of the society. It has been submitted that no such authorization was filed with the writ petition, hence, the petition itself was not maintainable. The Administrative Member of the Tribunal has continued by virtue of interim order of learned Single Judge, therefore, the orders passed by him in the meanwhile are saved from challenge on the ground of his continuance as such - Since it is pointed out that due to non-appointment of the Technical Member, the work of the Tribunal is suffering, therefore, the State Government are directed to take expeditious steps for appointment of the Technical Member in the Tribunal. Appeal disposed off.
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Indian Laws
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2022 (4) TMI 875
Dishonor of Cheque - insufficiency of funds - rebuttal of presumption of debt - legally enforceable liability or not - maintainability of complaint for not making the Firm as party to the proceedings - HELD THAT:- This Court has to consider the material available on record. On perusal of the complaint, it discloses that the complainant has filed the complaint against the petitioner and others in their individual capacity, wherein, it is stated that the accused Nos. 1 to 4 are the partners of Itagi Medicals. The complainant and accused No. 1 are known to each other and specifically stated that accused No. 1 was in need of money, requested the complainant to pay the amount in 2004. Accused No. 1 and other accused pleaded their inability and sought time and ultimately accused No. 1 gave the cheque. It is not in dispute that at the first instance, the Trial Court acquitted accused Nos. 3 and 4 and also a case was split up against accused No. 2 and no details with regard to the status of split up case of accused No. 2. The matter was also challenged in the Appellate Court and remanded to the Trial Court for fresh consideration. When the cheques were admitted by this petitioner and only his defense that the cheques were given in 1993 and not in the year 2004 and the same has not been established. Hence, presumption has to be drawn in respect of the transaction is concerned. The Trial Court also in paragraph No. 17 taken note of the said fact into consideration and the Appellate Court in the appeal in paragraph No. 18 discussed that the accused has not disputed the issuance of cheque and the signature thereon. It is also the specific case of the accused that in order to discharge the liability, he had issued the cheque in question to the complainant - When both the Courts have given the reasoning while convicting the petitioner based on both oral and documentary evidence placed on record, there are no error committed by both the courts and only this Court can exercise the revisional jurisdiction if the judgment of the Trial Court and the Appellate Court contrary to the evidence available on record. If any such perverse finding is given or otherwise, the revisional jurisdiction cannot be exercised. Having taken note of such factual aspects is concerned; it is the matter of almost two decades and question of interfering with regard to the sentence also not warranted. The very contention is that both sentence as well as fine has been imposed and the said contention also cannot be accepted and both can be imposed. Here is an order to undergo six months simple imprisonment and now it is made it as two years and taking into note of the same, the same is not harsh as contended by the learned counsel for the petitioner. But, he claims that Firm was closed in the year 1993 and he is having the financial capacity and the said ground also cannot be accepted. The revision petition is dismissed.
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2022 (4) TMI 874
Dishonor of Cheque - insufficiency of funds - delay of 7 days in filing the complaint - time limitation - Whether the Appellate Court has committed an error in setting aside the order and remanding the matter to the Trial Court to consider the delay and whether it requires interference of this Court? - HELD THAT:- The material discloses that there is a delay of seven days in filling the complaint. It is not in dispute that the proviso is made in N.I. Act under Section 142(b) to condone the delay, if any, in filing the complaint. On perusal of the order of the Appellate Court, it is clear that an application is filed before the Appellate Court and also it is not in dispute that the delay aspect has been raised for the first time before the Appellate Court and no such defence was taken before the Trial Court. It has to be noted that in the case on hand also this is a peculiar facts and circumstances of the case and no such contention was taken before the Trial Court by the petitioners and if they had raised the issue of delay before the Trial Court, the complainant ought to have been given an opportunity to make necessary application to condone the delay and admittedly for the first time, the issue has been raised before the Appellate Court. Only on the ground that there is a delay, the complaint of the complainant cannot be thrown to the dustbin - It is important to note that an amendment is brought in the year 2003 to Section 142 and clause (b) was inserted keeping in mind the reasons and objects of the Act and to obviate the complainant of the hardship. The Court has to take note of the wisdom of the legislature in bringing such an amendment and when the issue is raised for the first time in the appeal, the Court has to take note of all these factors into consideration. The Court has to take note of the very proviso of Section 142(b) of the N.I. Act which confers jurisdiction upon the Court to condone the delay i.e. original Court or otherwise the very purpose and wisdom of the parliament would be defeated. The issue of limitation for the first time is raised before the Appellate Court and the Court exercising the discretion to condone the delay did not arise at all before the Trial Court and hence the Appellate Court has not committed any error in setting aside the judgment and directing the complainant to file necessary application to condone the delay and the Trial Court by giving an opportunity to the petitioners to consider the said application. The original complaint is of the year 2016 and already six years have been elapsed. Hence, the Trial Court is directed to dispose of the matter within one year from today - petition dismissed.
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2022 (4) TMI 873
Suit for recovery of money - legal presumption under Sec.118 of the Negotiable Instruments Act, not considered - burden of proof of payment of money - suit for recovery of money disbelieving the payment of consideration without an material evidence or documents - HELD THAT:- It is true that the execution of the pronote is admitted. However in the written statement the defendant specifically denied the passing of consideration as it was recited in the document. As a matter of fact the written statement specifically refers to the figure being shown in the suit promissory notes as ₹ 60, 000/- However in the written statement a specific plea is raised by the defendant that the suit is not maintainable as there is material alteration of the suit promissory note. It is true that the statutory or legal presumption under Sec.118 of the Negotiable Instruments Act is important. However the plaintiff in a case of this nature cannot simply rely upon the statutory presumption when there is material alteration. In the present case, the defendant has come forward how the plaintiff used to get the signature in the promissory notes at the time of borrowing money and about previous transaction between the plaintiff and defendant. The lower Appellate Court has accepted the case of defendant and disbelieved the version of plaintiff with regard to consideration. Having regard to the finding of the Appellate Court which is the final Court of fact, this Court finds no substantial questions of law so as to interfere with the findings of the lower Appellate court. Appeal dismissed.
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2022 (4) TMI 872
Dishonor of Cheque - insufficiency of funds - discharge of legally enforceable debt or not - section 138 of the Negotiable Instruments Act - HELD THAT:- The learned counsel appearing for the petitioner on the issue, cannot be agreed upon, that the cheques were not returned not for insufficiency of funds, but directing the petitioner to present the same before the proper zone - The offence under 138 of the Negotiable Instrument Act will complete, after the accused persons failed to response to the demand notice. So, whether in the facts and circumstances of the case, the offence will be attracted or not is for the trial court to consider. Since the trial is already commenced, unless there is a compelling circumstances brought on record by the petitioner, based upon the RBI circular, the proceedings cannot be quashed. Petition dismissed.
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2022 (4) TMI 871
Dishonor of cheque - vicarious liability invoking Section 141 of the Negotiable Instruments Act - HELD THAT:- It is not in dispute that the Company, viz., M/s.Himaalayaa Agro Tech Limited was not arrayed as an accused. Further, on perusal of the cheque, it is seen that the cheque was issued by the Company signed by its authorised signatory. In a proceedings under Negotiable Instruments Act the Directors and others of the Company fastened with vicarious liability invoking Section 141 of the Negotiable Instruments Act and in the absence of Company [Principal] being arrayed as accused, the proceedings against others invoking Section 141 of the Negotiable Instruments Act is not sustainable. Added to it, on perusal of the notice and the complaint, it is seen that there is no specific averments against the petitioners who had taken part in the dayto- day affairs of the Company. Hence, it is imperative to array the company as an accused and thereafter, proceed against the Directors and others. Thus, looking from any angle the accused cannot be prosecuted and hence, the complaint against the petitioners is not sustainable. Petition allowed.
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2022 (4) TMI 870
Maintainability of petition - Whether the proceedings could be initiated against the petitioner alone who is an employee of the Company and not the Company? - HELD THAT:- This Court in similar case of SRI SUDEEP SRINIVAS (REPRESENTED BY HIS GPA HOLDER SMT. PUSHPALATHA G., SMT. PREETHI RAMAMOHAN (REPRESENTED BY HER GPA HOLDER SMT. SHUBHA RAMMOHAN VERSUS STATE OF KARNATAKA BY THE STATE OF KARNATAKA REPRESENTED BY MALLESHWARAM, POLICE STATION, SATISH KUMAR B.P. [2021 (9) TMI 1373 - KARNATAKA HIGH COURT] where reliance placed in the judgment of the Apex Court in the case of ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. [ 2012 (5) TMI 83 - SUPREME COURT] where it was held that the proceedings without making the Company a party was not maintainable. The present petition also raised a similar issue where the proceedings are instituted against the petitioners, who are Directors of the Company (accused Nos.1 and 2) without the proceedings are instituted without making the Company a party. The criminal petition is allowed.
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