TMI Tax Updates - e-Newsletter
May 15, 2020
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Indian Laws
Highlights / Catch Notes
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GST:
Validity of action of the GST authorities to stop the goods and conveyance - principles of natural justice - GST MOV-11 has already been passed - It is suggestive of the fact that the final order of confiscation of the goods and conveyance has been passed. In such circumstances, we decline to interfere in the matter. We relegate the writ applicant to prefer a statutory appeal under Section 107 of the G.S.T. Act before the appellate authority.
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Income Tax:
Depreciation on Digital Content/Animation Software developed - This digital content was manipulated by assessee to be used in different films but still it cannot be categorized at higher pedestal of being termed as ‘computer program’ rather it still retains the character of copyrighted material being intangible asset.
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Income Tax:
Validity of notice u/s 143(2) - Assessee has intimated the change of address within the prescribed time and the assessee has taken all the necessary steps to object the jurisdiction which was not at all considered by the Assessing Officer at the relevant time. In fact, the said AO does not have any jurisdiction. Thus, the Assessment Order itself becomes null and void ab initio.
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Income Tax:
Reopening of assessment u/s 147 - capital gain of sale of land - agriculture land or not u/s 2(14) - The assessee is claiming exemption and hence onus is on assessee to prove that its income falls within four corners of exemption provisions as are contained in the 1961 Act.
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Income Tax:
Addition u/s 40A(2)(b) - payment to the persons specified - the AO estimated the profit of the assessee and determined the income, nowhere he doubted the expenses incurred by the assessee. Therefore, AO was not justified in making the addition by invoking the provisions of Section 40A(2)(b) of the Act
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Income Tax:
Penalty u/s 27ID - cash loans exceeding ₹ 20,000 from agriculturists - since the creditor had given the loan from their agricultural income and the borrower was also engaged in agricultural activity, the provisions of section 269SS are not attracted, has not been verified by the AO as well as by the CIT(A) from the perusal of the evidences, matter remanded back.
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Income Tax:
Income earned by sale of land - The assessee is into the business of acquiring and sale of plot and colonizers. On going through the Memorandum and Articles of Association, conduct and business affairs of the assessee, and on perusal of the books of accounts of the assessee, it cannot to be said to be an income arising out of capital gains and has been rightly treated as business income by the ld. CIT (A).
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Income Tax:
Penalty u/s 271(1)(C) - Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income.
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Income Tax:
Deduction u/s 36(1)(viia) - provision created for bad and doubtful debts - RBI guidelines prescribes the provision on standard assets from the year ended March 31, 2000 directing the banks to make a general provision of a minimum of 0.25% on standard assets. - Decision rendered by the CIT is unjustifiable for the reason that assessee is bound by the guidelines issued by the Reserve Bank of India.
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Indian Laws:
Dishonor of Cheque - offence u/s 138 of NI Act - In view of the Section 27 of the General Clauses Act it is not necessary to mention in the complaint that service of notice was evaded by the accused or that the accused has stated about the notice to be un-served when the notice was sent by registered post at the address of the applicant, the mandatory requirement of issue of notice under Clause (b) of proviso to Section 138 of the Act stands complied with
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IBC:
Duties of IRP - collation of claims of "financial creditors", "operational creditors", etc., both domestic and international - "committee of creditors" allowed to guide the "resolution professional" to enable him to prepare a (draft) agreement showing the terms and conditions to take up the matter with the administrator of Holland for his consent.
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Service Tax:
Refund of service tax - retrospective exemption - rejection of refund on the ground of time limitation - Department was of the view that the refund claimed ought to have been filed within six months from the date on which Section 104 of Finance Act, 2017 was introduced and received assent of the President - rejection of refund claim on the ground of time bar is unjustified
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (5) TMI 309
Validity of action of the respondent No.2 to stop the goods and conveyance - principles of natural justice - HELD THAT:- The order in form GST MOV-11 has already been passed by the concerned authority. It is suggestive of the fact that the final order of confiscation of the goods and conveyance has been passed. In such circumstances, we decline to interfere in the matter. We relegate the writ applicant to prefer a statutory appeal under Section 107 of the G.S.T. Act before the appellate authority.
It is clarified that pending the appeal that may be filed by the writ applicant, it shall also be open for the writ applicant to prefer an application under Section 67(6) of the Act for the provisional release of the goods upon execution of a bond and furnishing of a security or on payment of applicable tax, penalty and interest payable. If any such application is filed, the concerned authority shall look into the same and pass an appropriate order in accordance with law within a period of one week from the date of receipt of such application.
Application disposed off.
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Income Tax
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2020 (5) TMI 308
Provisional attachment of FDRs - search action under Section 132 - HELD THAT:- Having considered the suggestions put forward by both sides we dispose of this writ application with the following directions :
(i) The impugned order of provisional attachment dated 10.12.2019 shall continue to operate in accordance with law.
(ii) As the bank accounts have not been freezed or attached by the department, it shall be open for the writ applicant to operate such bank accounts / limits in accordance with law.
(iii) If the department wants to initiate any fresh action including the action of further provisional attachment, it shall be open for them to do so in accordance with law.
With the aforesaid directions, this writ application stands disposed of. It shall be open for the writ applicant to inform the concerned department of the order passed by this Court by E-mail.
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2020 (5) TMI 310
Depreciation on Digital Content/Animation Software developed - held by assessee as an ‘asset’ which is used in various films by assessee - Eligible to depreciation @ 60% or 25% - definition of computer software - HELD THAT:- The scope of ‘Information Technology Software’ as is referred to in Hon’ble Supreme Court judgment in assessee’s own case [2006 (5) TMI 90 - SUPREME COURT] was in context of Customs Laws which was very vide definition and hence we cannot draw analogy in the 1961 Act read with 1962 Rules.
Digital contend developed by assessee can be equated with computer program is far fetched but rather it is a copyrighted material developed by assessee which is stored in computer. This digital content was manipulated by assessee to be used in different films but still it cannot be categorized at higher pedestal of being termed as ‘computer program’ rather it still retains the character of copyrighted material being intangible asset and in our considered view, the assessee is eligible for depreciation @ 25% as these copyrighted material developed by assessee being ‘Digital Content’ which is used by the assessee in various films etc. - Decided against assessee.
Disallowance u/s14A r.w.r. 8D(2)(iii) - expenses incurred by assessee in relation to earning of an exempt income - AO disallowed the expenses by invoking Rule 8D(2)(iii) by applying 0.5% of the average investments - HELD THAT:- We find merit in contentions of the assessee that the investments in Indian companies which did not yielded exempt income during the year cannot be included for computing disallowance of expenditure u/s 14A read with Rule 8D of the 1962 Rules and we are restoring the matter back to the file of the AO for verification of the contentions of the assessee and to re-adjudicate the matter on merits in accordance with law. Thus, all those investments in indian companies which did not yielded exempt dividend income during the year shall be excluded while computing disallowance of expenditure u/s 14A read with rule 8D(2)(iii) of the 1962 Rules.
Case of ACIT v. Vireet Investment Private Limited [2017 (6) TMI 1124 - ITAT DELHI] is relevant. This ground partly allowed for statistical purposes
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2020 (5) TMI 307
Validity of notice u/s 143(2) - Jurisdiction of AO New Delhi on the assessee within the meaning of Sec. 120 - transfer of jurisdiction - ITO Ward 23(4) New Delhi claimed jurisdiction on the ground that PAN was still lying with the said ward and on the said basis, the assessment has to be made by him for AY 2008-09 - HELD THAT:- In the present case, there is gross violation of the procedure laid down in the Act. For seeking transfer of jurisdiction, there is a prescribed procedure in Sec. 127 and the CIT-8 had to refer the issue to CIT-13 explaining the reasons as to why he wants to get the case transferred to him. A regular order u/s 127 had to be passed by Pr.CIT-13 and only then the jurisdiction could be transferred from Ward 39(4) to Ward 23(4).
On receipt of notice dated 20.07.2010 from ITO Ward-23(4), the assessee filed his objection on 05.08.2010. Even on receipt of this objection, the AO did not act on it and no effort was made to comply with the statutory provisions for acquisition of proper jurisdiction in accordance with law. Thus, the AO without deciding the issue of jurisdiction passed the Assessment Order u/s 144 which is not as per the mandate of the Income Tax Act, 1961.
Assessee has intimated the change of address within the prescribed time and the assessee has taken all the necessary steps to object the jurisdiction which was not at all considered by the Assessing Officer at the relevant time. In fact, the said AO does not have any jurisdiction. Thus, the Assessment Order itself becomes null and void ab initio. - Decided in favour of assessee.
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2020 (5) TMI 306
Penalty u/s 271(1)(c) - Defective notice - surrender of income was not made by assessee on his own volition but only after the same has been detected by the AO - HELD THAT:- Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision in the case of SSA’S Emerald Meadows [2016 (8) TMI 1145 - SC ORDER] where the SLP filed by the Revenue has been dismissed is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down in case of M/s. Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case. - Decided in favour of assessee.
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2020 (5) TMI 304
Reopening of assessment u/s 147 - capital gain of sale of land - whether the said land is a capital asset u/s 2(14) or is an agricultural land entitling assessee to exemption? - conversion of the land into residential area - HELD THAT:- The assessee has not furnished any evidence even before us to prove that agricultural operations were carried on the said land but only bald statement is made that water melon and pumpkin was grown. The assessee has filed additional evidences before us to contend that Government of Tamil Nadu vide Notification in G.O. Ms No. 153 dated 20.06.2013 had included Thaiyur Village in the Mamallapuram Local Planning Area , which is post the said previous year. The said land falls within Chengalpattu District , which falls within jurisdiction of CMDA and it is to be verified from which date the said land came within CMDA as there are master plans which were revised from time to time .
There is a need for detailed verification and enquiry in the instant case with respect to classification of said land , whether it falls within jurisdiction of CMDA during relevant period or not, whether agricultural activities were conducted by assessee on the said land or not, whether the said land is a capital asset u/s 2(14) or is an agricultural land entitling assessee to exemption etc. , before arriving at the conclusion as to chargeability to tax of the capital gains earned by assessee on the sale of said land. The assessee is claiming exemption and hence onus is on assessee to prove that its income falls within four corners of exemption provisions as are contained in the 1961 Act.
Matter needed to go back to the file of the AO for framing denovo assessment on merits of the issue as well on legal/jurisdictional ground raised by assesse wrt reopening of the concluded assessment u/s 147 - Decided in favour of assessee for statistical purposes.
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2020 (5) TMI 305
TP Adjustment - selection of MAM - CUP method against the TNMM as the most appropriate method - HELD THAT:- Hon’ble Jurisdictional High Court of Punjab & Haryana in NISSIN BRAKE INDIA PVT. LTD. . [2020 (1) TMI 1190 - PUNJAB AND HARYANA HIGH COURT] held that there is no need to deviate from TNMM followed by the assessee to CUP method followed by the revenue.
Hence, keeping in view the judgment above we hereby direct the revenue to determine adjustments considering the TNMM as the most appropriate method.
TPA - Comparable selection - rejection of one comparable selected by the assessee in their TP documentation and selection of five comparables by the revenue in their TP study - HELD THAT:- Since, the business of the assessee is “ core auto components”, we hold that it cannot be compared with an entity which is in the business of “ non- core auto components”.
Capacity Utilization Adjustment - HELD THAT:- We have gone through the record and the orders of the Tribunal for the earlier three assessment years i. e. assessment yeas 2010-11, 2012-13 and 2013-14 wherein the capacity utilization adjustment has been duly granted. Keeping in view the industrial standing of the comparable, we hereby direct that the same benefit may be accorded in the instant year.
Brought forward losses - HELD THAT:- AO is directed to consider relief on account of brought forward losses as per the Income Tax Act after taking into consideration the business losses and unabsorbed depreciation as per the earlier returns filed by the assessee.
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2020 (5) TMI 303
Addition u/s 40A(2)(b) - payment to the persons specified - computing the profit of the Joint Venture @4% of the gross receipts - HELD THAT:- As decided in M/S KEC SIDHARTH JV, M/S KEC PLR KPIPL JV [2018 (4) TMI 1747 - ITAT DELHI] AO made the addition by invoking the provisions of Section 40A(2)(b) of the Act which are applicable to the expenses considered to be excessive or unreasonable having regard to the fair market value of the goods/services or facilities for which the payment is made. However, in the instant case, the AO estimated the profit of the assessee and determined the income, nowhere he doubted the expenses incurred by the assessee. Therefore, AO was not justified in making the addition by invoking the provisions of Section 40A(2)(b) of the Act which are applicable to the expenditure and not to the receipts and the ld. CIT(A) rightly deleted the same. - Decided in favour of assessee
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2020 (5) TMI 302
Penalty u/s 271(1)(c) - addition on account of “Short Term Capital Gains” against the amount declared under the head “Long Term Capital Gains” - HELD THAT:- Co-ordinate Bench of ITAT [2014 (6) TMI 933 - ITAT DELHI] in the case of the assessee has deleted the addition made on account of Short Term Capital Gains. The matter was further remanded back to the AO for examination of re-investment of LTCG in the new asset. Since as on date, the quantum addition stands deleted by the Tribunal, the penalty levied on such income is hereby set aside with liberty to revive the proceedings based on the outcome of the re-investment of the Long Term Capital Gains.
Short Term Capital Gain on house property after claiming repair expenses - CIT (A) confirmed the disallowance made by the AO on the grounds that even during the appellate proceeding, the assessee was unable to justify the claim by producing relevant documentary evidence in support of repair expenses - HELD THAT:- Assessee has made payment to four parties on account of the repairs undertaken in the property which has been sold for which the Short Term Capital Gains have been offered to tax.
CIT (A) would have been inadvertently ignored the payments made while confirming the disallowance in absence of anything contra brought by the revenue about the payment of the repair charges to the four persons mentioned above. Hence, we hereby direct the disallowance made by the revenue is liable to be deleted.
Addition u/s 14A - suo moto disallowance by assessee - HELD THAT:- Provisions of Section 14A(2) have not been adhered to by the revenue and keeping in view the fact that the assessee suo moto has disallowed nearly 30% of the exempt income received, we find that the invocation of Rule 8D in this case is legally not tenable. The disallowance made is directed to be deleted. In the result, the appeal of the assessee is allowed.
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2020 (5) TMI 301
Unexplained investment in the commercial property by assessee HUF - deduction u/s 80C denied - AR submitted that the entire family is earning a handsome amount either in individual parity or as HUF and entire cash amount is out of disclosed & declared sources - HELD THAT:- CIT(A) observed that since no withdrawal was shown in the return of income by the HUF, therefore, it is difficult to believe that the HUF has contributed for the household expenses of the assessee. Besides that the CIT(A) also rejected the contention of the assessee that the assessee required the cash in hand for his probable medical expenses. But the fact remains that the assessee has also explained the introduction capital of ₹ 8,25,505/- as capital by stating that he had received money from his father in law of ₹ 5,00,000/-, amount transferred from minor son saving bank account of ₹ 1,41,800/-, amount transferred from minor daughter’s saving account of ₹ 23,000/-, amount transferred from wife’s saving account of ₹ 63,000/- apart from dividend income and mutual fund receipts.
AO as well as CIT(A) both did not look into the evidences brought on record by the assessee. The CIT(A) also has not given any cogent reason as to why said addition sustains. In fact, the observation of the CIT(A), that no documentary evidence was shown in respect of father in law and wife is incorrect and needs to be verified. Therefore, it will be appropriate to remand back this matter to the file of the Assessing Officer to verify the evidences which were produced by the assessee before the CIT(A). Ground allowed for statistical purpose.
CIT(A) was rightly rejected the deduction u/s 80C of the Act.
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2020 (5) TMI 300
Penalty u/s 27ID - cash loans exceeding ₹ 20,000 from agriculturists living in village areas - HELD THAT:- 2nd proviso to section 269SS lays down that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act
Contention of the Ld. AR that since the creditor had given the loan from their agricultural income and the borrower was also engaged in agricultural activity, the provisions of section 269SS are not attracted, has not been verified by the Assessing Officer as well as by the CIT(A) from the perusal of the evidences. Thus, the revenue authorities failed to look into the evidences produced before them and did not verify the same in context of Section 269SS
Remand back this issue to the file of the AO for proper adjudication - Appeal of the assessee is partly allowed for statistical purpose.
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2020 (5) TMI 299
Income earned by sale of land - business income or Long Term Capital Gains - whether the land in question is investment or stock-in-trade irrespective of the fact whether the books of accounts have been wrongly accounted or whether the capital gains have been wrongly offered to tax? - assessee has taken plea that the land has been sold only on account of the notice received from the revenue department to surrender the land as it was an encroachment on the Gaon Sabha Land - HELD THAT:- The notice was issued in the year 1997 hence cannot be given any relevance with regard to determination for the issue before us. The fact that the land in question has been sold after obtaining NOC from the ADM, South District, New Delhi on 24.01.2011. We find that the main objects of the company are to acquire purchase take on lease are otherwise any land building, structures plot to act as real estate agents in connection with buildings schemes and also to be colonizers to sale plots and flats. Having acquired the land as stock-in-trade, the land continued to be held for business purpose and continued to be shown as closing stock for all the years.
The assessee is into the business of acquiring and sale of plot and colonizers. On going through the Memorandum and Articles of Association, conduct and business affairs of the assessee, and on perusal of the books of accounts of the assessee, it cannot to be said to be an income arising out of capital gains and has been rightly treated as business income by the ld. CIT (A).
Whether the capital gains are eligible to avail its exemption? - Since, the income earned has been already adjudicated on merits to be taxed as “business income”, it is hereby clarified that the treatment proposed by the assessee to consider the proceeds of the sale of land under the head “Long Term Capital Gains”and subsequent exemption from taxation cannot be held to be valid in the eyes of law.
Disallowance u/s 40(a)(ia) - CIT-A uphold addition on the grounds that the assessee is not a new company and been in the business of land transactions from 1997 and the provisions of TDS are clearly defaulted by the assessee - HELD THAT:- In the absence of any evidences contra, putforth by the assessee, we hereby decline to interfere with the order of the ld. CIT (A) on this issue. - Decided against assessee.
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2020 (5) TMI 298
Penalty u/s 271(1)(C) - Non specification of charge - whether the penalty is going to be levied for concealing particulars of income or furnishing of inaccurate particular of income? - HELD THAT:- Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income.See M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SC ORDER] - Decided in favour of the assessee.
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2020 (5) TMI 297
Unexplained cash credit u/s 68 - Assessee claimed taking loan and payment of interest thereon - HELD THAT:- Explanation of assessee should be acceptable so far as first instalment loan of ₹ 20 lakhs is concerned and to that extent, the loan of ₹ 20 lakhs stands explained. Regarding second credit of ₹ 20 lakhs, we find that to the extent of ₹ 9 lakhs received from Vishal Transport, the explanation should be acceptable.
Cash deposit of ₹ 11 lakhs (₹ 8 lakhs + ₹ 3 lakhs), there is requirement of investigation into the source of cash deposits in the bank account of Shri Dinkar Shankar Kumbhar, Prop. Shri Swami Bricks.
Accordingly, we are of the opinion that the matter should be remanded to the file of Assessing Officer for verification of assessee’s arguments i.e. cash withdrawals from the account of the assessee constitutes source of cash of ₹ 11 lakhs. The Assessing Officer shall give reasonable opportunity of hearing to the assessee and in case the assessee files any evidences, explanations, etc. should accept the same and make re-assessment on this issue. Thus, grounds raised by assessee are partly allowed for statistical purposes.
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2020 (5) TMI 296
Rectification u/s 254 - obvious and patent mistake - Cost of acquisition AND deduction claimed u/s.54F - HELD THAT:- Core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. For fortifying this view, we make reference to the decision of the Hon'ble jurisdictional High Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ld.[2008 (9) TMI 11 - SUPREME COURT].
Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company [1992 (11) TMI 32 - BOMBAY HIGH COURT] has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - in the guise of rectification, the assessee is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2) of the Act. Miscellaneous Application filed by assessee is dismissed.
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2020 (5) TMI 295
Deduction u/s 36(1)(viia) - provision created for bad and doubtful debts u/s 36(1)(viia) which included a provision in respect of standard assets disallowed - As per AO deduction u/s 36(1)(viia) is not allowable with respect to the provision in respect of standard assets as according to him, it was good and recoverable and provision made on such assets cannot be considered to be a provision for bad and doubtful debts - HELD THAT:- As relying on BELLAD BAGEWADI URBAN SOUHARD SAHAKARI BANK NIYAMIT VERSUS THE COMMISSIONER OF INCOME TAX (APPEALS) BELAGAVI [2018 (3) TMI 737 - KARNATAKA HIGH COURT] RBI guidelines prescribes the provision on standard assets from the year ended March 31, 2000 directing the banks to make a general provision of a minimum of 0.25% on standard assets.
Decision rendered by the CIT is unjustifiable for the reason that assessee is bound by the guidelines issued by the Reserve Bank of India. Any contrary view taken by the Income Tax Authorities would disentitle the assessee from claiming deduction u/s 36(1)(viia).
Assessee is eligible for deduction and we thus, direct the AO. - Decided in favour of assessee.
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Corporate Laws
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2020 (5) TMI 294
Invocation of Bank Guarantee - petitioner intends to approach the NCLT and seeks an injunction against the IOCL from encashment/invocation of the bank guarantees, forming subject matter of this writ petition, but that, owing to the lockdown, announced by the Central Government, consequent upon the n-COVID-2019 crisis, which is to continue in force till 3rd May, 2020 as of now, he is not in a position to do so - HELD THAT:- Issue notice to the respondents to show cause as to why rule nisi be not issued.
Renotify on 10th June, 2020 before the Roster Bench.
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2020 (5) TMI 293
Invocation of Bank Guarantee - petitioner unable to approach this Court due to COVID pandemic situation - petitioner only seeks a limited amnesty for his client by way of a restraint against the IOCL, from encashing the aforesaid three bank guarantees, till expiry of one week from lifting of the lockdown, imposed by the Central Government, which is presently in force till 3rd May, 2020 - HELD THAT:- This writ petition is disposed of by granting limited relief, to the petitioner, to the extent that, till the expiry of period of one week from the lifting of the lockdown, imposed by the Central Government, consequent to n-COVID-2019 pandemic, the IOCL shall remain injuncted from encashing/invoking the aforesaid three bank guarantees, i.e. Bank Guarantee No. 0346415BG0000105 dated 9th December, 2015 for an amount of ₹14,73,82,051/- issued by Respondent No. 2, Bank Guarantee No. 160127IBGA00005 dated 25th February, 2016 for an amount of ₹ 29,47,64,102/- and Bank Guarantee No. 160127IBGA00014 dated 19th April, 2016 issued by Respondent No. 3 for an amount of ₹49,44,58,134/-, till the expiry of one week from the lifting of the lockdown imposed by the Central Government, which is presently in force till 3rd May, 2020.
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2020 (5) TMI 292
Oppression and mismanagement - Approval of Resolution Plan - allotment of equity shares to Respondent No.6 - whether the Resolutions passed during Board of Directors meeting of Respondent No. 1, held on 23rd January 2019, authorizing and allotting the impugned allotment of 1,89,000 shares to Respondent No. 6 is in accordance with law or not? - whether the impugned Sale Deed dated 26th September, 2018 is to be oppressive and seriously prejudicial to the interests of the Company? - Whether the Petitioners are entitled for their appointment as Directors. If so, what is the relief the Petitioners are entitled for?
HELD THAT:- It is not the case of Petitioners that their original shareholdings have been reduced but by virtue of the impugned allotment of shares to the Respondent No. 6, their percentage of shares in the Company stand reduced - The impugned allotments of shares do not suffer any legal impediment and thus it should be upheld to be legal. The Petitioners in the absence of any Agreement cannot demand to appoint them as Directors of the Company, as matter of right, and this issue was already dealt with by the Company at appropriate levels.
And there is no requirement of shares to hold to become Directors of the Company, as per Articles of Association Company. And other reliefs as asked for are devoid of merits. The Petitioners failed to make out case that the Affairs of Company being conducted in a manner prejudicial or oppressive to the Petitioners or to the Company so as to invoke jurisdiction of this Tribunal under the extant provisions of Companies Act 2013. As detailed supra, the affairs of Company is being successfully run by the stewardship of Respondent Nos.2 & 3 and earning adequate profits and distributing substantial dividends.
Subsequent to the filing of main Company Petition, I.A.No.649 of 2019 filed by the Petitioners, under Rules 11 & 34 of the NCLT Rules, 2016, by inter alia seeking to permit them to implead the proposed Seventh Respondent Company i.e. M/s. AKP Foundries Private Limited in the present proceedings. Since, the Tribunal finds that the main Petition itself lacks merits, there would not serve any purpose to allow the impleading Application.
The instant Company Petition lacks of merits and thus it is liable to be dismissed - petition dismissed.
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Insolvency & Bankruptcy
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2020 (5) TMI 291
Duties of IRP - collation of claims of "financial creditors", "operational creditors", etc., both domestic and international - control and custody of all the assets over which the "corporate debtor" has ownership rights - HELD THAT:- In view of such duties empowered on the "interim resolution professional", he is required to collate the claim of all "offshore creditors" or take control and custody of the assets of the "corporate debtor" situated outside India (in Holland) or other places, but for giving it effect the "resolution professional" is required to reach an arrangement/agreement with the administrator appointed pursuant to the proceeding initiated at Holland.
The question as to whether the "committee of creditors" have any role to play is left open for decision at appropriate stage/in an appropriate case but for the present, we allow the "committee of creditors" to guide the "resolution professional" to enable him to prepare a (draft) agreement showing the terms and conditions to take up the matter with the administrator of Holland for his consent.
Post the case for "orders" on September 20, 2019 at 12.00 noon on the top of the list.
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Service Tax
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2020 (5) TMI 290
Refund of service tax - retrospective exemption - Period of limitation of 6 months - amount which was collected by the service provider SIPCOT (State Industries Promotion Corporation of Tamil Nadu Ltd., A Govt. of Tamil nadu Undertaking) on development charges - Department was of the view that the refund claimed ought to have been filed within six months from the date on which Section 104 of Finance Act, 2017 was introduced and received assent of the President - HELD THAT:- The issue decided in the case of M/S. TEKNOMEC VERSUS COMMISSIONER OF GST &CENTRAL EXCISE, CHENNAI [2019 (7) TMI 1416 - CESTAT CHENNAI] where it was held that rejection of refund claim on the ground of time bar is unjustified - rejection of refund set aside - appeal allowed - decided in favor of appellant.
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Indian Laws
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2020 (5) TMI 289
Maintainability of Arbitral Award - outstanding dues in respect of the supply of Smart Cards made by the Petitioner to the Respondent - differential tax deposited by the Petitioner due to non-issuance of Sales Tax 'C' Forms by the Respondent alongwith interest - unutilized 49,500 Red Pre-printed Smart Cards/ White Smart Cards - non-procurement of referral Authentication Kits (RAKs) by the empanelled medical facilities - reimbursement of the costs/ expenditure incurred by the Petitioner in providing services to the Respondent for the period 1.06.2015 to 8.07.2015.
Recovery of a sum of ₹ 30,239/- being the amount of outstanding dues in respect of the supply of Smart Cards made by the Petitioner to the Respondent - HELD THAT:- No patent illegality can be found in the rejection of the said claim except to the extent of ₹ 2025/- which has been allowed towards the claim payable by Regional Centre, Hissar. It was for the petitioner to lead evidence to show that the invoices being filed in support of the claim pertained to the claim amounts, as also to show that the Smart Cards were actually delivered. In most of the claims under this Head, the petitioner failed to connect the invoices filed, with the amounts claimed while with respect to Regional Centre, Lucknow, the petitioner could not rebut the evidence of the respondent that the Smart Cards were even received - this part of the Award calls for no interference in judicial review by this Court under Section 34 of the Act.
Recovery of a sum of ₹ 80,77,215/- on account of the differential tax deposited by the Petitioner due to non-issuance of Sales Tax 'C' Forms by the Respondent alongwith interest thereon @ 21% from the date of deposit till 28.02.2017 to the tune of ₹ 1 0587373/- - HELD THAT:- There is no evidence for proving the Sales Tax Challans filed by the petitioner and nor were the originals produced. The deposition of PW-1, Rajendra Yadav, is noted wherein he admits that the amounts indicated in the Challan do not exclusively relate to the Smart Cards supplied to the respondent and also relate to the other parties as well - The Tribunal has come to a finding that the respondent is not a ‘dealer’ under Section 2(b) of the Act nor a ‘registered dealer’ with the Sales Tax Department under Section 7. Respondent has been established by the Ministry of Defence for providing Contributory Health Scheme to the beneficiaries under the Scheme and is not in any business so as to be termed as a registered dealer for selling or buying cards. The Tribunal also observes that the Smart Cards supplied to the beneficiaries will not be termed as a sale or a resale under the Act. Respondent was, therefore, not liable to give any Form ‘C’ to the petitioner - Claim rejected.
Recovery of a sum of ₹ 66,89,250/- on account of unutilized 49,500 Red Pre-printed Smart Cards/ White Smart Cards - HELD THAT:- The Award suffers from no illegality leave alone a patent illegality. The respondent herein is right in its contention that the Agreement clearly underscored the need of the parties to stop the work in the last month of the Contract and hand over the software and the hardware to the respondent. The admitted position was that the petitioner required 25 days to deliver the cards towards any application approved and sent to it. Thus, on a given date in a given month, the Cards which were delivered were naturally ordered atleast 25 days prior thereto. The respondent had vide its email dated 28.04.2015 clearly reiterated that the Agreement would expire on 31.05.2015 and they had no intent to extend it beyond the said date. No applications as admitted by the petitioner were approved in the month of May 2015. Thus, the contention of the petitioner that it had suffered loss due to the unutilized cards on account of the act of the respondent is misplaced.
Recovery of a sum of ₹ 2,97,67,500/- on account of non-procurement of referral Authentication Kits (RAKs) by the empanelled medical facilities - HELD THAT:- The Tribunal in its wisdom has interpreted the word ‘facilitate’ to signify recommendation or suggestion and not imposing or mandate. It is no longer res integra that interpretation of the Clauses of the Contract is the domain of the Tribunal. The Tribunal has given a particular interpretation to the Clause and in my view this is not only a possible but a plausible view requiring no interference. I find merit in the contention of the respondent that surely the respondent could not impose itself on the hospitals to procure the Kits from the petitioner. This was neither the mandate nor the obligation under the Contract nor can even be sustained in any commercial transaction or in the business common sense.
Recovery of a sum of ₹ 4450440/- as reimbursement of the costs/ expenditure incurred by the Petitioner in providing services to the Respondent for the period 1.06.2015 to 8.07.2015 - HELD THAT:- Having raised a claim, the onus of proving that the services were rendered by the petitioner was on the petitioner itself. Petitioner could not place any order on record by which the respondent had sought its services beyond the contractual period. On the contrary, Annexure C-19 was an email dated 28.04.2015 issued by the respondent to its Regional Centres, with a copy to the petitioner, that the petitioner should return all the hardware and software to the ECHS, in compliance with Clause 9.1.3 of the Agreement - also, this Claim was in clear contradiction to the claim for unutilized Smart Cards. On one hand, the petitioner complained about withholding the applications which proved that the Contract was to end on 31.05.2015 while on the other hand, it urged that it worked beyond the contractual period. RW-1 had clearly deposed and proved the email dated 28.04.2015, but no attempt was made by the petitioner to demolish the testimony of the witness, in cross-examination.
This Court finds no reason to interfere with the said Award, there being no patent illegality or perversity - petition dismissed.
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2020 (5) TMI 288
Transfer of cases relating to MPs and MLAs to the Special courts for fast tracking - HELD THAT:- When there are directions with specificity from Hon’ble Supreme Court to constitute / designate courts at both Sessions and Magisterial levels (that too as many courts as required), after having understood the same correctly and after having constituted / designated courts also in the same manner, non designating the lone Metropolitan Magistrate Court in Chennai alone particularly when Hon’ble Supreme Court had made it clear that as many courts as necessary, deemed fit and expedient have to be constituted / designated at both levels deserves a closer examination. This court is constrained to make this observation as the lone reason for non designating the II Metropolitan Magistrate is work load and the perception that said court may not be able to allocate time to hear cases involving M.Ps / M.L.As on day to day basis.
According to fourth respondent, there were no magisterial offences / cases in this category as of 05.03.2019. Be that as it may, a simple way out would have been to constitute / designate more courts at magisterial level, as Hon’ble Supreme Court has already given directives with specificity in this regard. To be noted, even today, it is submitted without any disputation that Courts of Judicial Magistrates which were designated / constituted in 31 judicial districts for trying cases involving M.Ps / M.L.As are still functioning. Therefore, 6.9.2019 letter / communication of fourth respondent, third respondent acting on the same and making G.O.Ms.No.535 dated 11.10.2019 are presenting some difficulty. Notwithstanding clear / specific directives from Hon’ble Supreme Court, if and if at all non designating lone Metropolitan Magistrate Court in Chennai alone had become imperative / inevitable, ideally, third and fourth respondents could have approached Hon’ble Supreme Court and sought suitable directives. Admittedly, this was not done.
This Court deems it pertinent to mention that there is no submission / explanation, much less material regarding why more Metropolitan Magistrates in Chennai were not designated (as per directives of Hon’ble Supreme Court, i.e., as many as deemed necessary at Sessions and magisterial levels) though this Court is informed that there are more than 20 Metropolitan Magistrates courts in Chennai. However, considering the scope of cases on hand, this court refrains itself from dilating further into this aspect of the matter.
There is no explanation, much less even plausible explanation that is being put forth for not transferring the petitioners’ cases to Court of II Metropolitan Magistrate.
For Court of Sessions taking cognizance of a case without committal by a Magistrate, there are only two exceptions. One exception is an express provision in Cr.P.C in this regard and the other is any express provision in this regard in any other law. An express provision if any can at best be considered to be one under Section 280B(a) of IT Act, which talks about Special Court. The question of cases on hand being heard by a special court will arise only if so designated as mentioned in section 280A of IT Act. A perusal of section 280B of IT Act makes it clear that offences become triable by Special Court ‘if so designated’, but, no such designation has been made as far as Tamil Nadu is concerned. Therefore, lack of original jurisdiction for Sessions Court argument is saved by Ranbir Yadav principle though ideally, transfer could have been made to II Metropolitan Magistrate Court - a perusal of section 26 of Cr.P.C makes it clear that offences on hand are triable by Magistrate courts. Absent Special court under Section 280A of IT Act, section 26 of Cr.P.C operates and section 26 of Cr.P.C more particularly, subsection (b) of section 26 makes it clear that offences on hand which are ‘offences under any other law’ are triable in accordance with the First Schedule to Cr.P.C.
Ideally, either more number of Magistrate Courts should have been designated or Hon’ble Supreme Court should have been approached for suitable directions. This turns on fundamental principle of discipline in hierarchy of Courts. Therefore, the argument that transfer has the trappings / is traceable to Article 227 and Section 407 Cr.P.C is an argument which not only does not impress this Court, but it is an argument which cannot even be countenanced.
With regard to the argument that petitioners were neither M.Ps / M.L.As nor former M.Ps / M.L.As on the date of alleged offence or on the date of launching complaints, as Hon’ble Supreme Court has directed all pending cases to be transferred, this argument fails - Likewise, the argument that only one of the petitioners has become an M.P is of no avail to petitioners, as Hon’ble Supreme Court has directed transfer of all cases involving sitting / former M.Ps /M.L.As.
This Court deems it appropriate to make a parting observation that 4th and 3rd respondents in first and second Crl.O.Ps will do well to designate one or more Metropolitan Magistrate/s in Chennai for trying criminal cases related to elected M.Ps/M.L.As - Petition dismissed.
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2020 (5) TMI 311
Dishonor of Cheque - offence u/s 138 of NI Act - rebuttal of presumption - applicant has been summoned to face trial - applicant has submitted that the initiation of the present proceeding on the basis of the complaint filed by the opposite party no.2 is an abuse of the process of law as there is no strict compliance of provision of Section 138 of Negotiable Instrument Act - HELD THAT:- In view of the catena of the decisions of the Apex Court and also passed by this court in SMT. REENA TRIPATHI VERSUS STATE OF U.P. AND ANOTHER [2014 (7) TMI 1323 - ALLAHABAD HIGH COURT] wherein it has been held that after service of notice if the amount of disputed cheques is not paid the cause of action accrued to the complainant to file the complaint against the drawer of the cheque. The interim order dated 31.3.2009 passed in favour of the applicant staying the proceeding of the summoning order dated 2.6.2007 is liable to be vacated and the petition be dismissed.
The disputed question of fact cannot be dealt with in exercise of power under Section 482 Cr.P.C. in view of the catena of decisions of the Hon'ble Apex Court; the denial of the applicant that the cheque has not been issued by him and his cheque was lost and in respect of which Bank has also been informed; that the complaint is pre mature, the mandatory requirement of service of notice is lacking; the complaint was filed pre mature are all disputed questions of fact, which can only be gone into during the course of trial. The complaint was filed along with the oral and documentary evidence, which have already been referred to in the preceding paragraph, prima facie constitutes offence against the applicant.
The cheque dated 29.1.2007 of ₹ 10,00,000/- given by the applicant was deposited by the complainant on 31.1.2007 in his bank at Canara Bank, Roorki Road, Muzaffar Nagar, which was returned by the bank with the endorsement of "insufficient fund" on 9.2.2007 along with memo dated 14.2.2007, which was received by the complainant on 26.2.2007, hence a notice was given with respect to the dishonour of cheque by the complainant through registered post on 9.3.2007, which was received at the address of the applicant and even after expiry of 15 days when the required amount mentioned in the cheque was not returned nor any reply was given, hence the complaint was filed on 26.4.2007 by the opposite party no. 2. Merely not mentioning the date of receipt of notice or service of notice by the complainant is a disputed question of fact, which shall be considered by the trial court.
In view of the Section 27 of the General Clauses Act it is not necessary to mention in the complaint that service of notice was evaded by the accused or that the accused has stated about the notice to be un-served when the notice was sent by registered post at the address of the applicant, the mandatory requirement of issue of notice under Clause (b) of proviso to Section 138 of the Act stands complied with, therefore, the cognizance of the complaint under Section 138 of the Act has been taken as the court was satisfied prima facie that the case is made out under that section and that the procedural requirement has been complied with. To rebut presumption about the service of notice or that the address was incorrect or the filing of complaint prior to the expiry of notice period that would be considered by the trial court at the appropriate stage.
The application is bereft of any merit accordingly dismissed.
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