TMI Tax Updates - e-Newsletter
May 16, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
-
Income Tax:
Shares received by the appellant as gift - The chart reproduced in the Assessment Order clearly shows that it is not a gift but a family arrangement and these kind of family arrangement cannot be termed as gift/benefit or perquisite. AO by lifting the corporate veil, without providing any cogent reasons, and without appreciating that the beneficiary never obtained any benefit from this transaction at any time cannot comment on the said transaction as sham and bogus.
-
Income Tax:
MAT credit - the Tribunal after deliberating the issue and analyzing the provisions of section 115JA and 2(43) of the Act read with relevant clauses of the Finance Act has held that the MAT credit allowable to the assessee is inclusive of surcharge and cess.
-
Income Tax:
Exemption u/s. 11 - charitable activity u/s 2(15) - Mere registration of u/s. 12A of the Act may not entitle the assessee to claim exemption. At the best, registration u/s. 12A of the Act is only to identify the entity. The assessee apart from registration u/s. 12A has to establish that it is engaged in the charitable activity.
-
Income Tax:
Unexplained credit - Since surrender have been made in earlier year as well as in subsequent year of the amounts in question and taxes have been paid and the amount which was surrendered in earlier year have been realized in assessment year under appeal, therefore, same would not be taxable in assessment year under appeal. This reason alone is sufficient to delete the addition against the assessee
-
Indian Laws:
Dishonor of Cheque - non-bailable warrant - it is not clear that one of main ingredient i.e. date of service of notice from which the date the cause of action arises i.e. date of bank return memo as per the provisions of Section 138 N.I. Act is completely missing in the present case - As per Section 138 read with Section 142 N.I. Act, the period of complaint being filed from the date of service of notice i.e. within one month is also not complied in the present case.
-
Indian Laws:
Dishonor of Cheque - insufficiency of funds - There is nothing on record to show that the husband and wife were at logger heads or that they were living separately. Her version that, the signature on the cheque was forged by the husband was not seen put to PW1 in cross examination. On the other hand, her contention is falsified from the very fact that, she has gone to the extent of stating that even the postal acknowledgment produced along with the complaint was forged and produced by the complainant themselves.
-
IBC:
CIRP proceedings - The attachment of the assets of the Corporate Debtor by the Economic Offences Wing will hamper the claim of the Creditors of the Corporate Debtor and therefore to protect the interest of the Bank and the present Creditors, this Bench directs the Economic Offences Wing and other Government Departments to release the property and assets of the Corporate Debtor currently attached with them so that the Corporate Insolvency Resolution Process of the Corporate Debtor could be conducted in the substantial public interest.
-
IBC:
Initiation of CIRP - Proof of existence of debt or dispute - deduction of TDS can be safely held to be in connection with raising Invoices. Thus, the operational creditor is able to establish that the corporate debtor committed default of operational debt and the petition deserves to be admitted.
-
PMLA:
In view of the present situation, if it is not possible for the petitioners herein to sign the appeal paper book or the affidavits before the Appellate Tribunal, the same may be considered by the Tribunal on the signatures of learned counsel for the appellants, subject to the appellants making good the defects as soon as practicable, and not later than one week after the lifting of the national lockdown.
-
Central Excise:
CENVAT Credit - capital goods - items of iron and steel - These items are admittedly utilized in the foundation and erection of machinery, the issue stands settled in favour of the appellant.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2020 (5) TMI 334
Bail application - bogus firms/companies for fraudulently receiving huge amount as GST refunds - HELD THAT:- It is deemed just and proper to grant bail to the accused petitioner under Section 439 Cr.P.C. - bail application allowed.
-
Income Tax
-
2020 (5) TMI 330
Addition u/s 69C - unaccounted business expenses not debited in P & L Account - HELD THAT:- Considering the nature of business of assessee and that no evidence has been brought on record by the A.O. of incurring all these expenses, the estimate made by the A.O. of ₹ 10 lakhs expenditure is wholly unjustified. It is a fact that assessee has not claimed any expenditure of routine business expenses, electricity expenses, fuel expenses which are necessary for running of the business. We restrict the addition to ₹ 3 lakhs as against ₹ 10 lakhs made by the A.O. The Orders of the authorities below are therefore modified to that extent and A.O. shall make addition of ₹ 3 lakhs only.
Alternate claim of assessee before the Ld. CIT(A) with regard to claim of depreciation which is statutory in nature. A.O. has noted the details of the asset and addition made to the asset in assessment year under appeal. The balance-sheet is before A.O. Therefore, it being the statutory deduction in nature, A.O. is directed to allow depreciation to the assessee as per Law, by giving reasonable, sufficient opportunity of being heard to the assessee. Assessee may produce other evidences before A.O, if necessary or called for by the A.O. on this issue. With these directions Ground No.1 of the appeal of the Assessee is partly allowed.
Unexplained credit shown as addition to assessee’s capital account in the proprietary of M/s. Rhea Distribution Co. - cash deposited in the bank account and capital account have not been explained - surrender as additional income - HELD THAT:- Since surrender have been made in earlier year as well as in subsequent year of the amounts in question and taxes have been paid and the amount which was surrendered in earlier year have been realized in assessment year under appeal, therefore, same would not be taxable in assessment year under appeal. This reason alone is sufficient to delete the addition against the assessee. Documentary evidences on record and explanation of assessee, we do not find any justification to sustain any addition against the assessee. We set aside the Orders of the authorities below and delete the entire addition. Ground No.2 of the appeal of assessee is allowed.
-
2020 (5) TMI 339
Shares received by the appellant as gift - transaction of receipt of shares as taxable in the hands of the beneficiary under section 2(24)(iv) - sham and void transaction - HELD THAT:- The words benefit and perquisite are used in this clause of sub-section (24) to Section 2. Whether gifting shares amounts any benefit or perquisite has to be looked into. In the present case at one point the AO has stated that there is benefit to assessee company but at the same time states that the transaction of gift of shares held by Mrs. Arti Jindal in the assessee company to M/s PRJ Holding Private Trust was not valid and was a sham and void transaction which was undertaken to avoid tax.
But from the MOU submitted by the assessee company it can be clearly seen that it a family arrangement and internal family realignment amongst the members of the family of Late Shri O.P. Jindal and cannot be taken as gift. The chart reproduced in para 3 hereinabove from the Assessment Order clearly shows that it is not a gift but a family arrangement and these kind of family arrangement cannot be termed as gift/benefit or perquisite. AO by lifting the corporate veil, without providing any cogent reasons, and without appreciating that the beneficiary never obtained any benefit from this transaction at any time cannot comment on the said transaction as sham and bogus.
Observations made by the AO in the present assessment order are without any jurisdiction. In fact, the AO overstepped the provisions of the Income Tax Act wherein the Assessment is nil in the case of present Assessee company and commented on the third party assessee which is not permissible under the Act. Ground No. 1 of the assessee’s appeal is allowed.
-
2020 (5) TMI 333
Deduction u/s 80IA - Tribunal held profit making power generating unit of the assessee should be taken into account and not the loss making units in computing the total income of the assessee for its eligible business to allow deduction u/s 80IA - deduction u/s 80IA windmill or eligible business wise - HELD THAT:- Issue involved in this appeal is squarely covered by an order in the case of COMMISSIONER OF INCOME TAX AND ANOTHER Vs. SWARNAGIRI WIRE INSULATIONS P. LTD. [2013 (2) TMI 202 - KARNATAKA HIGH COURT] - Decided against revenue.
-
2020 (5) TMI 338
MAT credit - inclusion of surplus and cess - HELD THAT:- Issue involved vide aforesaid grounds is squarely covered by the decision of the Tribunal in the case of ‘DCIT Ludhiana vs M/s Aarti Steels Ltd.’ [2018 (10) TMI 1836 - ITAT CHANDIGARH] wherein, the identical issue was raised and the Tribunal after deliberating the issue and analyzing the provisions of section 115JA and 2(43) of the Act read with relevant clauses of the Finance Act has held that the MAT credit allowable to the assessee is inclusive of surcharge and cess.
-
2020 (5) TMI 337
Revision u/s 263 - Exemption u/s 80P - HELD THAT:- Order passed by the Prin. CIT is bad in law as it does not satisfy the twin conditions, and emphasized that the assessee is entitled for exemption under Section 80P and in the scrutiny proceedings, AO has conducted enquiries in respect of income and claims. On perusal of the assessment order, find that the AO has issued Notice u/s 142(1) of the Act along with questionnaire, but there are no findings or observations of the AO that he has conducted enquiries in respect of income and claims made by the assessee.
In the course of hearing, the Bench wanted the Ld AR to furnish details filed in response to notice under Section 142(1) of the Act and questionnaire, the learned Authorized Representative could not substantiate with material evidences filed in the Assessment proceedings. The fact remains that the order passed by the AO prima facie, is without conduct of Enquiry.
Assessing Officer could not conduct enquiry into income and claims made by the assessee nor the assessee could demonstrate with evidences that the Assessing Officer has conducted the enquiry.
AO has passed the order without conducting enquiries or verifications, and CIT has set aside the order passed u/s 143(3) by the AO and directed the A.O for fresh examination in respect of incomes and claims. Accordingly, we are not inclined to interfere with the order of CIT and of the view that there is no infirmity in the revision order of Pr CIT and upheld the same and dismissed the grounds of appeal of assessee.
-
2020 (5) TMI 336
Reopening of assessment u/s 147 - notice beyond the statutory period of four years - Tribunal is of the considered opinion that reopening of the assessment beyond the statutory limit of four years goes to the root of the matter, therefore it is not necessary either for the assessee or to the Department to raise the issue before this Tribunal - HELD THAT:- There was no necessity for raising this issue of limitation, this Tribunal is expected to record a finding whether the assessment was reopened within the period of limitation. In this case, the assessee has taken a specific ground before this Tribunal as 2.1 saying that the assessment was reopened u/s. 147 beyond four years. As rightly submitted by the assessee there was not even a whisper in the assessment order that the assessee failed to disclose the entire details required for completion of the assessment. It is not in dispute that the assessment was reopened beyond four years period. Therefore, this assessment is barred by limitation under proviso to s.147 of the Act. Therefore, the orders of both the authorities below are set aside and the appeal of the assessee stands allowed.
Exemption u/s. 11 - charitable activity u/s 2(15) - Establishing Kalyana Mandapam - HELD THAT:- It is purely a commercial activity. Therefore, the assessee is not entitled for exemption u/s. 11 of the Act. The matter would stand different, in case establishing Kalyana Mandapam is an ancillary object for securing funds to carry out charitable activity. In the case on hand, establishing Kalyana Mandapam is one of the main object. Establishing Kalyana Mandapam being one of the main object may not be a charitable activity.
Mere registration of u/s. 12A of the Act may not entitle the assessee to claim exemption. At the best, registration u/s. 12A of the Act is only to identify the entity. The assessee apart from registration u/s. 12A has to establish that it is engaged in the charitable activity. Since no charitable activity is carried on by the assessee, this Tribunal is of the considered opinion that the assessee is not eligible for exemption u/s. 11 of the Act. Accordingly, the orders of the lower authorities are confirmed and all the appeals of the assessee are dismissed.
-
2020 (5) TMI 332
Reopening of assessment u/s 148 - 'reason to believe '- Valuation of shares u/s 56(2) (viib) - HELD THAT:- Admittedly no tangible or fresh material that has come to the notice of the Assessing Authority and this is an admitted fact as may be seen from the reasons that have been extracted elsewhere in this order. The relevant phrase in Section 147 is 'reason to believe', and it has been the consistent stand of the Supreme Court that such reason must emanate from tangible or new material that has come to the notice of the AO and should not tantamount to review of the material already available on record. If this were to be permitted, there would be no end to the number of times when successive officers might apply and re-apply their mind to the same stale material coming to different conclusions every time.
In the present case, the financials annexed to the return of income disclose two lot of shares, one numbering 1,00,000 and second numbering 2,17,870. The valuation thereof is also stated clearly. This has not escaped the attention of the Assessing Authority at the original instance and he has in fact made a modification to the valuation of the first lot of shares. For reasons best known to him, the second lot has been left untouched. Admittedly, there is no material that has come to the notice of the Assessing Authority in 2018 to warrant re-assessment. The proceedings impugned before me are thus nothing but a change of opinion, impermissible in law.
-
2020 (5) TMI 331
Reopening of assessment u/s 147 - Period of limitation - HELD THAT:- Last date for invoking Section 148 for the Assessment Year 2008-09 express only on 31/03.2015 and for the AY 2009-10 on 31.03.2016 since the impugned notice are dated 17.03.2013, they are well within time.
Had there been a finding given on merits that there was no case for escaped assessment for the respective assessment years in response to Section 148 notice issued for the 1st time on 7.3.2011, it can be said that the 2nd notice dated 17.5.2015 u/s 148 would have been barred and therefore there were no reasons for invoking Section 148 again.
Respondents are not precluded from invoking Section 148 for the 2nd time as the issue as to whether income had escaped assessment or not was decided by the CIT (Appeals) on merits. As pointed out that there a mandatory failure by the and further reassessment orders dated 31.12.2011 were set aside.
Notices were not only in time but also in accordance with law. Therefore, the consequential impugned orders passed by the respondent are sustainable and cannot be quashed. Therefore these writ petitions are liable to be dismissed.
Dispute pertains to the assessment year 2008-09 and assessment year 2009-10. The re-assessment proceedings have been considerably delayed partly due to the lapse on the part of the respondents on an earlier occasion which resulted in the orders of the Commissioner of Income Tax (Appeals) on 12.11.2013 and partly on account of the petitioner due to pendency of the present writ petitions.
Respondent is directed to complete the proceedings within a period of 3 months from the date of receipt of a copy of this order in accordance with law.
-
2020 (5) TMI 335
Advertisement expenditure incurred on brand building u/s 37 - disallowance of expenditure for advertisement on sale promotion treating the same as expenditure for the future benefits and enduring in nature - HELD THAT:- As decided in own case [2019 (6) TMI 288 - ITAT DELHI] public memory is very short and, therefore, the companies have to incur advertisement expenditure year after year to keep products fresh in the minds of the public - such expenditure cannot partake the character of giving any enduring benefit. AO has grossly erred in treating such expenditure as intangible asset and on facts of the case, the findings of the Id. CIT(A) needs no interference. - Decided in favour of assessee.
-
Customs
-
2020 (5) TMI 329
Reallocation of Raw Petroleum Coke to the Petitioner commensurate to its total installed capacity - grievance of the applicant/petitioner is that it has a certificate reflecting its production capacity issued in November, 2018 but has other available documents relating to July, 2018 establishing that its enhanced capacity existed from July and was not created after 09.10.2018, i.e. after the judgment of the Supreme Court - HELD THAT:- In agitating this issue qua the Public Notice dated 17.04.2018, it is in effect seeking a variation of this condition relating to the production capacity, as on 09.10.2018, so that when a decision is taken in the future for allocation of 1.4 LMT of imported RPC, the higher capacity is considered, to its benefit. Clearly, such a relief cannot be claimed by means of an application in a writ petition which is challenging a decision already taken in February, 2020. Moreover, this could open a pandora’s box as others may have similar wish lists or grievances qua the conditions and modalities. Further, any variation in the conditions cannot be considered in the absence of the other players who are as of now not known as the last date for submission of applications is 05.05.2020. The scope of the writ petition cannot be permitted to be expanded so as to convert it almost into a Public Interest Litigation to question the conditions and modalities prescribed in a Public Notice dated 17.04.2020 issued by the DGFT.
Application dismissed.
-
Corporate Laws
-
2020 (5) TMI 328
Enlargement of the petitioner on bail - liabilities of Directors - Siphoning of funds - allegations against the petitioner are that he was one of the promoters and close associate of Srivastava’s and whole time director of RHL between financial year 2011-12 to 2014-15 when funds were deposited with MCD and when the refund from MCD was masqueraded and shown as unsecured loan repayable to Rishi Kumar Srivastava - power of Central Government to investigate into the affairs of a company - petitioner claims that he is not goods heath condition and requires hospitalization during the judicial custody.
HELD THAT:- The medical report shows that the susceptibility of the petitioner to COVID 19 due to incarceration is not higher and further the contention of the petitioner that he had lost 13 kgs in the last 3 months is false, rather his weight had been constant at 78 Kgs for the last 73 days which is within the normal limits (between 17.02.2020 to 29.04.2020). Further, considering that the petitioner is being given all required medical treatment by the Jail Authorities and that his condition is stable from the last two months, it is established that the petitioner is not having any higher susceptibility of getting infected by COVID 19 due to incarceration in the jail environment - Also considering that the height of the petitioner is around 6 feet and his present weight is 78kgs, the Body Mass Index (BMI) of the petitioner is 23.5 Kg/M Sq. Given that the healthy/normal BMI range prescribed by WHO is between 18.5 Kg/M Sq. to 25 Kg/M Sq., by no stretch of imagination can the petitioner be termed as underweight. In fact, the ideal weight range for the petitioners height is between 62 & 82 Kgs - thus, there are no medical grounds available to the petitioner for grant of bail.
In any case, admittedly, the petitioner had no role to play with the banks inasmuch as the petitioner was not a guarantor to any bank loan of RHL. In any case, the banks have not filed any complaint with regard to having been deceived, rather, admittedly, the entire outstanding of the bank has been cleared - After going through the status report and considering the arguments advanced by learned Additional Solicitor General, Ms.Maninder Acharya, the main beneficiary of all the 7 instances of fraud is Prabhat Kumar Srivastava and his family. The petitioner herein has received peanuts through interest in shares. All directors and promoters are equally liable, therefore, cannot be different parameter for petitioner and other promoters.
It is not in dispute that investigation is complete, criminal complaint has been filed and charges are yet to be framed. Presently, our country is under ‘Lock-down’ due to COVID-19, therefore, regular functioning of the courts may take more time. Thus, in the present situation, trial of the present case is not possible in the near future. Further, there is no allegations that petitioner is flight risk or may temper with the evidence or influence the witnesses.
Since present application is for bail, therefore, this Court refrains from making any observation on the merit of the prosecution case, which is subject matter of the Trial. However, in view of above facts and considering the period in judicial custody, this Court is of the view that petitioner deserves for bail - Petitioner is allowed to be released on bail subject to his furnishing a personal bond in the sum of ₹ 50,000/- before the concerned Jail Superintendent and a surety of the like amount to the satisfaction of Trial Court as and when, the Court starts its regular functioning.
Bail Application allowed.
-
2020 (5) TMI 327
Restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies, NCT of Delhi and Haryana - Appellant failed to file its Annual Returns and Financial Statements after the year ending 31.03.2015 - HELD THAT:- The provisions under section 252 of the Companies Act, 2013, pertaining to restoration of the name of the Company provide that, if satisfied that the Company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the Register of Companies, Tribunal may order the name of the Company to be restored to the Register of Companies.
The Appellants through their submissions and arguments have been able to satisfy this Bench that it was in operation when its name was struck off by the RoC in its register. Further, the Appellant Company has certain assets and liabilities, which necessitate and justify restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures.
The Petition is allowed subject to payment of cost of ₹ 25,000 to the Prime Minister Relief Fund, the proof of which will be furnished by the Appellant to the Registry of this Tribunal within 07 days.
-
Securities / SEBI
-
2020 (5) TMI 326
Non-compliance of summons issued by SEBI - whether the appellant has violated provisions of Section 11C(3) of the SEBI Act? - whether clause 43 of the Listing Agreement has been violated by not disclosing to the Stock Exchange the alleged variations between the projected utilization of funds and the actual utilization of funds raised through the preferential allotment? - HELD THAT:- Though the appellant may be charged with non-submission of full information the submission of the appellant that the management of the appellant was new etc. has to be given some weightage while imposing the penalty. Given this and the facts of the matter, we are of the view that the amount of penalty at the rate of ₹ 10 lakh on this violation is on the higher side particularly when the appellant did provide part of the information readily available with them.
Non-reporting of the variations relating to the proceeds/funds raised through preferential allotment- It is an admitted fact that, during the interim, part of the funds were loaned out to various entities. Even if these funds have come back subsequently and in some cases with interest the matter needed to be disclosed to the Stock Exchange in terms of the requirements of Section 21 of SCRA and clause 43 of the Listing Agreement which has not been done.
Note from paragraph 23 of the impugned order that the claim of the appellant that in all cases they received interest on the loans given to other parties is not correct as in four out of eight instances no interest has been received and in one instance in fact even the full amount of principal also was not received (in place of an advance against property of ₹ 1.75 crore appellant has received only ₹ 1.71 crore). In any case from the same paragraph we note that 41% of the allotment proceeds were invested in shares and another 45.31% was loaned out to seven entities out of which three did not pay any interest and in one instance of advance against the property instead of getting the property only part of the advance was returned. So the contention in the impugned order that the proceeds were not used according to the objective specified cannot be faulted and the same was not reported is an admitted fact. Given these facts imposition of penalty of ₹ 20 lakh cannot be said to be arbitrary or harsh.
We reduce the penalty amount imposed under section 15A(a) of SEBI Act from ₹ 10 lakh to ₹ 5 lakh and retain the penalty amount imposed under section 23E of SCRA at ₹ 20 lakh.
-
Insolvency & Bankruptcy
-
2020 (5) TMI 325
Permission to applicant to take possession of fixed assets and all documents avaliable in the office and other premises of the Corporate debtor - mortgage of the property - HELD THAT:- As per Section 65-A(2)(c) of the Transfer of Property Act, 1882 as amended from time to time, no lease shall contain a covenant for 'renewal'. In the lease agreement of the Corporate Debtor, in a related party transaction with Marathe Hospitality, the total rent for a huge Commercial property measuring about 2310 sq. mtr. along with two-storeyed building structure, is only ₹ 25,000 per month with no increase in rental for a period of 10 years. In addition, as per the Lease Agreement, there is a provision for further extension at the sweet will of Lessee. In view of this, the Lease Agreement entered into between Phadnis Resorts and Spa India Limited and Marathe Hospitality is illegal as per the relevant provisions of the Transfer of Property Act, 1882 - the lease agreement entered into between Corporate Debtor and Marathe Hospitality in 2016 without the consent of Union Bank of India who are having First charge on the property is mala fide and is invalid.
It is also clear that the Union Bank of India, after going through all records and title report of the property, have financed the Corporate Debtor and, therefore, the property which was acquired in 2004 has not been acquired by the Corporate Debtor fraudulently. The attachment of the assets of the Corporate Debtor by the Economic Offences Wing will hamper the claim of the Creditors of the Corporate Debtor and therefore to protect the interest of the Bank and the present Creditors, this Bench directs the Economic Offences Wing and other Government Departments to release the property and assets of the Corporate Debtor currently attached with them so that the Corporate Insolvency Resolution Process of the Corporate Debtor could be conducted in the substantial public interest.
Thus, in terms of Section 238 of IBC and considering the overriding effect of IBC u/s 238 of the Code this Bench is of the considered view that the attachment order of the Economic Offences Wing is a nullity and non-est in law and therefore will not have any binding force.
The Resolution Professional who is the Applicant in this Miscellaneous Application to take possession of fixed assets and all documents available in the office and other premises of the Corporate Debtor - application allowed.
-
2020 (5) TMI 324
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute - the contention of the corporate debtor is that the operational creditor has to render services to the Fund Manager and it is the Fund Manager who shall pay to the operational creditor/Asset Advisor - HELD THAT:- It is true that there was agreement between the Fund Manager, viz. Messrs Lighthouse Canton Private Limited and the operational creditor. Messrs Lighthouse Canton Private Limited is the Fund Manager of the Fund. According to the said Advisory Agreement, the operational creditor has to render services to the Fund Manager and fee is also to be paid by the Fund Manager. However, the Advisory Agreement was subsequently amended and as a consequence, Addendum Agreement was entered into between the Fund Manager, the operational creditor, the corporate debtor and other subsidiaries of the Fund. The Addendum was executed among them on 1-3-2018. The contention of the operational creditor that by virtue of the terms of the Addendum, the operational creditor was empowered to raise Invoices on the corporate debtor and payment to be made soon after raising of Invoices. The operational creditor is relying on the Addendum shown as Annexure-7 starting from page 105 of the Paper Booklet. The corporate debtor is a party to this Addendum. Terms of Addendum are binding on the corporate debtor. It is an amendment to the Advisory Agreement.
The raising of Invoices on the corporate debtor by the operational creditor is in terms of the Clauses of the Addendum. There is neither illegality nor irregularity in raising Invoices in the name of the corporate debtor. The operational creditor has relied on the unpaid Invoices, six in number, raised on the corporate debtor, shown as Annexure-8, at pages 119-124 of the Paper Booklet filed by the operational creditor. All the Invoices are raised in the name of the corporate debtor. It is also not the case of the corporate debtor that the amount under Invoices was paid by the Fund Manager. The operational creditor can proceed only against the corporate debtor, because the Addendum has expressly provides raising Invoices in the name of the Fund Subsidiary and payment to be made by the Fund Subsidiary. The operational creditor is able to establish that it has raised Invoices for the services rendered to the corporate debtor.
Debtor-creditor relationship between Corporate Debtor and the operational creditor - HELD THAT:- The ultimate beneficiary is the corporate debtor for the services rendered by the operational creditor. Invoices to be raised only on the corporate debtor as per the Addendum, but not on the Fund Manager. So the relationship of debtor- creditor is existing between the corporate debtor and the operational creditor. When the corporate debtor being a party to the Addendum gave liberty to the operational creditor to raise Invoices, then it falls within the definition of 'operational debt'. So it can never be said that there was no operational debt and that there was no liability on the corporate debtor to honour the Invoices.
The next contention raised by the corporate debtor that even as per the terms of Addendum, all the Invoices were to be approved by the Fund Manager before payment - HELD THAT:- There was no correspondence by the corporate debtor with the operational creditor questioning the liability on the ground that there was no prior approval of the Fund Manager. Had it been the case that the Invoices were not approved by the Fund Manager, the immediate reaction from the corporate debtor was to raise objection. It is very surprising that the corporate debtor never raised such an objection, but on the other hand made part-payment as well as deducted TDS. Therefore, we are not accepting the contention of the corporate debtor that raising of Invoices is in contravention of Clauses 2.3 of the Addendum.
Existence of prior dispute or not - HELD THAT:- The alleged dispute between the Fund Manager and the operational creditor cannot be extended to the liability arising under the Invoices. As regards the services rendered, no dispute is raised. It cannot be said that there was prior dispute basing on the alleged notice of breach. The alleged breach is in connection with the Trade Mark. The corporate debtor is totally unconnected with the dispute. It is stated that the operational creditor registered a company with the brand name 'MN' long prior to entering into the Advisory Agreement with the Fund Manager. The dispute, if any, over Trade Mark is neither directly nor indirectly connected to the services rendered to the corporate debtor by the operational creditor. Therefore, we do not agree with the contention of the corporate debtor that there was a pre-existing dispute.
The contention of the learned counsel is that mere fact that deduction of TDS does not mean that there was an admission of liability - HELD THAT:- The fact is that deduction of TDS affords an additional ground that raising Invoices is proper and that they are raised in connection with the services rendered to the corporate debtor. There is no transaction other than the transaction between the corporate debtor and the operational creditor, which is of rendering services by the operational creditor to the corporate debtor. Therefore, deduction of TDS can be safely held to be in connection with raising Invoices. Thus, the operational creditor is able to establish that the corporate debtor committed default of operational debt and the petition deserves to be admitted.
The Adjudicating Authority admits this Petition under section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code.
-
2020 (5) TMI 323
Recall of Order passed by this Tribunal - permission to Petitioner/Operational Creditor to withdraw the said Company Petition - It is contended that in the present application that the Respondent/Corporate Debtor was not aware of the above stated order till 20-12-2019, when the Applicant/IRP made him aware of our order - HELD THAT:- Since, in the present matter, the CoC is not reported to have been constituted till the date of settlement i.e. dated 26-12-2019 arrived at between the Operational Creditor and the Corporate Debtor we, being Adjudicating Authority place reliance on the decision of Hon'ble Supreme Court in the matter of Swiss Ribbons (P.) Ltd. v. Union of India [2019 (1) TMI 1508 - SUPREME COURT] where, their Lordships have pleased to observe that the Petitioner/Operational/Financial Creditor at any stage can withdraw the I.B. Petition and recall the CIRP initiated in respect of the Corporate Debtor.
The present application moved by the I.R.P. seeking for withdrawal of the Corporate Insolvency Resolution Process ("CIRP") and the moratorium; deserves to be allowed, hence, it is allowed in terms of its prayer clause. Consequently, the CIRP initiated in respect of the Corporate Debtor Company vide our order dated 25-11-2019 is hereby recalled and moratorium declared shall cease to have effects.
Application allowed.
-
2020 (5) TMI 322
Admissibility of application - pendency of the arbitration proceedings - appellant ready to pay all dues - HELD THAT:- As per the terms of settlement, both the parties agreed to share the cost and fee of the "interim resolution professional". Learned counsel for the parties state that cost and fee of "interim resolution professional" has already been paid, which is also accepted by learned counsel appearing on behalf of the "interim resolution professional".
In the facts and circumstances and in exercise of inherent powers conferred upon this Appellate Tribunal under rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we accept the terms of settlement and set aside the impugned order dated September 3, 2019 and release the "corporate debtor" from rigour of "corporate insolvency resolution process". The "interim resolution professional" will handover the assets and records to the "corporate debtor"/"promoter" - the order passed by the learned Adjudicating Authority appointing "interim resolution professional", declaring moratorium and all other order(s) passed by the Adjudicating Authority pursuant to impugned order and action taken by the "resolution professional" are set aside.
Appeal allowed.
-
2020 (5) TMI 321
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of dues - existence of debt and dispute or not - HELD THAT:- In annexure P18 dated July 5, 2015 of the respondent-corporate debtor written to the petitioner, categorically admitted and acknowledged the debt of ₹ 3,72,19,060 due to the petitioner. Thereafter, after adjusting the amount paid by the respondent-corporate debtor, the debt due was ₹ 2,66,82,849 and after adding the interest thereon the total amount of debt due and in default was ₹ 6,36,10,875. Annexure P5/A of the petition, i. e., the certificate under section 9(3)(c) of the IBC Code, 2016 issued by the State Bank of India also confirms the admission and part payment of various amounts by the respondent-corporate debtor to the petitioner - The petitioner proved the debt and the default, which is more than ₹ 1 lakh by the respondent-corporate debtor.
Since the petition is complete in all respects, the same is admitted - moratorium declared.
-
PMLA
-
2020 (5) TMI 320
Provisional attachment of properties - physical possession of properties - COVID-19 pandemic situation - HELD THAT:- In view of the present circumstances, including the restricted functioning of the judicial authorities and the consequent impediment which may be faced in having the matter heard expeditiously by the Appellate Tribunal, the respondents are directed not to give any further effect to the impugned notices dated 01.04.2020 for a period of fifteen days from today or until the matter is taken up by the Appellate Tribunal, whichever is earlier.
In view of the present situation, if it is not possible for the petitioners herein to sign the appeal paper book or the affidavits before the Appellate Tribunal, the same may be considered by the Tribunal on the signatures of learned counsel for the appellants, subject to the appellants making good the defects as soon as practicable, and not later than one week after the lifting of the national lockdown.
Petition disposed off.
-
2020 (5) TMI 319
Bail application - Money Laundering - Scheduled Offences - an amount of ₹ 2.55 Crores was seized/recovered from possession of the co-accused Dhirendra Singh and Sanjay Sethi - HELD THAT:- It is not in dispute that the petitioners have been granted bail by the Coordinate Bench of this Court at Principal Seat, Jodhpur under section 439 Cr.P.C. under the scheduled offences. It is also not in dispute that the petitioners are in custody since 19.02.2020/ 17.03.2020.
While dealing with the present bail applications, this court has to see three facts, 1. running away of the accused 2. tempering with the evidence 3. influencing witnesses - the petitioners are entitled to be released on bail for the reasons; firstly the argument of Mr. R.D. Rastogi, ASG that the petitioners failed to appear before the trial court from 21.01.2020 till 17.02.2020 is not of any help as the petitioners were persuing their legal remedy under the law during the said period; secondly since all the documents seized are lying either with the officers of the Department or with the Court, so there is no question of tempering with the evidence; thirdly so far apprehension of influencing the witnesses is concerned in my considered view no attempt has been made by the department to show that the petitioners have ever tried to influence the witnesses of the department and fourthly the petitioners have been granted bail under the scheduled offences and the trial of both the cases is jointly going on and therefore no useful purpose would be served in keeping the petitioners in custody and lastly the amount seized by the ACB is lying in the FDR and the same has not been used either by the petitioners or by other co-accused persons.
Bail application allowed - petition allowed.
-
Service Tax
-
2020 (5) TMI 318
Refund of unutilised Cenvat credit - Input services - cleaning-Pest Control Service - Air Travel Agent Service - Car Parking Service etc. - Group Insurance Service - Hotel Services - General Insurance Service - Banking and other Financial Services - Interior Decorator Service - Business support service - Event Management Service.
Cleaning services-pest control services - HELD THAT:- Pest Control Service have been availed for making the premises of the appellant pest free. The appellant has availed Pest Control Services in the nature of Cleaning Services - Credit allowed.
Air Travel Agent services - denial on the ground that there is no evidence to establish that the services were availed by the employees in discharge of their office duty - HELD THAT:- The employees have travelled in connection with the discharge of their office duty and, therefore, credit/refund is eligible.
Car Parking Service - HELD THAT:- Renting of Immovable Property Service has been disallowed stating that they do not have nexus with the output service. Needless to say that the rent paid for car parking facility enables the employees of the appellant as well as the customers coming to the office of the appellant to park their cars - Credit allowed.
Group Insurance Service - denial on the ground that it is excluded from the definition of input services - HELD THAT:- The appellant has not produced any evidence to show that said services are not availed for personal consumption of the employees - rejection of refund justified.
Hotel Services - denial on the ground that the same is excluded as these services are availed for personal consumption of the employees - HELD THAT:- The appellant has to be given a further opportunity to establish their contention furnish evidence that the said service has been used by employees in discharge of their official duty. This issue is remanded to the adjudicating authority - Matter on remand.
General Insurance Service - HELD THAT:- As per definition of input services, the credit availed on vehicles is not eligible. It is not brought forth from the record whether the entire premium is in respect of insurance for vehicles or whether it includes buildings and equipment also - for clarification of the issue, the same requires to be remanded to the adjudicating authority who shall reconsider the issue - matter on remand.
Banking and other Financial Services - disallowed stating that the appellant has not produced valid documents to evidence the availment of credit - HELD THAT:- The appellant has produced the credit card statements before the adjudicating authority to claim the refund. It is common knowledge that banks do not issue invoices in respect of the service tax deducted from the clients. It is reflected in the bank statements. The department does not have a case that the credit services were availed by any individual of the company - rejection of refund alleging that the appellant has not produced invoice for payment of service tax is not sustainable - refund allowed.
Interior Decorator Service - Business support service - Event Management Service - disallowed stating that these services do not have any nexus with the output service - HELD THAT:- The decision relied by learned counsel for the appellant in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS EMERSON INNOVATION CENTER [2015 (5) TMI 774 - CESTAT MUMBAI] has analysed the issue and held that there is no requirement to establish nexus of input service with output service. Moreover, w.e.f. 2012, Rule 5 has been amended wherein, the refund is eligible on input services and it is not necessary that the appellant has to establish that the input services were used for providing the output service - Refund allowed.
Appeal allowed in part, part rejected - part matter on remand.
-
Central Excise
-
2020 (5) TMI 317
CENVAT Credit - capital goods - cement, rebar coils, TMT bars and MS rebar utilized in foundation of machinery, machinery foundation, recovery foundation, ESP foundation, storage tanks etc. - HELD THAT:- So far storage tank is concerned, this is a specific item of capital goods mentioned in Rule 2 (a)(A)(vii) of CENVAT Credit Rules, 2004.
Other items of iron and steel - HELD THAT:- These items are admittedly utilized in the foundation and erection of machinery, the issue stands settled in favour of the appellant by ruling of Hon’ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE, [2015 (3) TMI 661 - MADRAS HIGH COURT] and also by the Hon’ble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS [2015 (5) TMI 663 - GUJARAT HIGH COURT].
Appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2020 (5) TMI 316
Principles of Natural Justice - Reassessment of tax - CST Act - penalty under the M.P. Commercial Tax Act - periods from 01.04.1993 to 31.03.1994 and from 01.04.1994 to 31.03.1995 - no opportunity during the reopening and reassessment proceedings was afforded to the petitioner and the same were conducted ex parte - HELD THAT:- It appears that grant of an opportunity to cross-examine is a concomitant of the expression “Reasonable Opportunity”. In the instant case, the matter was remanded by the State only for the purpose that opportunity of cross-examination which was not afforded to the petitioner in respect of the documents of the Krishi Upaj Mandi Samiti, Guna (M.P.) should now be afforded.
Since the Appellate Authority has passed the impugned order by assigning reasons which cannot stand the test of reasonableness as authority fails to even address the issue in its right perspective, this Court is of the considered view that the power of judicial review deserves to be exercised u/Art.226 of Constitution in favour of the petitioner.
The respondents are now directed to conduct reassessment proceedings by granting reasonable opportunity to the petitioner of cross-examination in respect of the documents pertaining to the Krishi Upaj Mandi Samiti, Guna (M.P.) - Petition allowed.
-
Wealth tax
-
2020 (5) TMI 315
Wealth tax assessment - valuation of land - Estimation as per the Wealth Tax Rules - assessee fairly submitted that the land in question is urban land therefore, it is liable for taxation under the Wealth Tax Act - HELD THAT:- Since assessee very fairly submitted that the land in question is urban land and liable for taxation, it may not be necessary for this Tribunal to go into the question whether this is an industrial land or not ? However, for the purpose of valuation as on the valuation date, the Wealth Tax Officer has to follow the procedure under the Wealth Tax Act after considering the locality of the land in question is situated, area of the land, potential for future development, infrastructure facilities available around the land etc. and other depressing factor such as the pendency of patta proceedings. This Tribunal is conscious of the fact that the patta is not a document of title.
Fact that the patta was granted initially and subsequently cancelled by the Tahsildar, definitely have an impact on the title of the property. Therefore, this is one of the relevant factor to be taken into consideration by the Wealth Tax Officer.
For the assessment year 2009- 10, the High Court has already fixed valuation, therefore it may not be necessary for the Wealth Tax Officer to re-examine the same. In other words, the valuation fixed by the High Court for the assessment year 2009-10 for registration of document has to be taken as value as on the valuation done by Wealth Tax Officer. For the assessment year 2013-14, the property was converted into stock-in-trade. This fact also needs to be taken into consideration by the Wealth Tax Officer. For other assessment years, the Wealth Tax Officer has to re-consider in the light of the observation made above. Accordingly, the orders of both the authorities below are set aside for the assessment years 2010-11 to 2013-14.
-
Indian Laws
-
2020 (5) TMI 314
Dishonor of Cheque - non-bailable warrant - offence u/s 138 of NI Act - validity of order of summon - HELD THAT:- A dishonour would constitute an offence only if the cheque is returned by the bank ‘unpaid’ either because the amount of money standing to the credit of the drawer’s account is insufficient to honour the cheque or that the amount exceeds the amount arranged to be paid from that account by an agreement with that bank. Now, for an offence under Section 138 NI Act, it is essential that the cheque must have been issued in discharge of legal debt or liability by accused on an account maintained by him with a bank and on presentation of such cheque for encashment within its period of validity, the cheque must have been returned unpaid. The payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information by him from the bank regarding such dishonor and where the drawer of the cheque fails to make the payment within 15 days of the receipt of the aforesaid legal demand notice, cause of action under Section 138 NI Act arises.
It is not disputed that neither in the complaint nor in the statement of the complainant recorded under Section 200 Cr.P.C., is it mentioned as to on which dates, he has demanded for refund of his money from the applicant, on which date he had presented the alleged cheques in the bank for encashment - The complainant has also not disclosed the date on which he had sent the legal notice to the applicant through his advocate and the date of service of notice. The complainant has also disclosed the date i.e. 3rd July, 2014 on which the dishonoured cheques along with return memo showing “insufficient balance” amount in the account of the applicant, has been received.
Thus, it is not clear that one of main ingredient i.e. date of service of notice from which the date the cause of action arises i.e. date of bank return memo as per the provisions of Section 138 N.I. Act is completely missing in the present case - As per Section 138 read with Section 142 N.I. Act, the period of complaint being filed from the date of service of notice i.e. within one month is also not complied in the present case.
In the impugned summoning order also the concerned Magistrate has only recorded the date on which the alleged cheques were dishonoured i.e. 3rd July, 2014 and the date of legal notice i.e. 14th July, 2014, which was sent to the applicant but he has not recorded the date on which the legal notice has been served from which the date the cause of action would arise - In view of the provisions of Sections 138 read with Section 142 N.I. Act, the main ingredients are not complied with by the complainant while filing such immature complaint, which is liable to be quashed.
Application allowed.
-
2020 (5) TMI 313
Dishonor of Cheque - stay of fine - effect of amendment in Section 148 of the N.I. Act - HELD THAT:- With the objective of reducing delay in proceedings pertaining to dishonour of cheques and to provide interim relief to the payee in such cases, the Negotiable Instruments (Amendment) Bill of 2017 was tabled before the Lok Sabha.
In the wake of current scenario, The Negotiable Instruments (Amendment) Act, 2018 passed by both the Houses (Lok Sabha on July 23, 2018; Rajya Sabha on July 26, 2018; and notified on August 02, 2018) has come as a breather for the aggrieved Drawees. Nonpayment because of cheque dishonor contribute majorly towards business inconsistencies leading not only to an cash flow, but also chain of inconveniences/incalculable losses forced upon them involuntarily - Further, delayed justice owing to lengthy court procedures add to the woes. Therefore, the Amendment Act aims to give potency in enforcing quick relief and to act as a deterrent for future cases by enhancing credibility of cheques as a negotiable instrument.
The Drawer of the cheque is made liable to prosecution and partial payment upon dishonour of the cheque implying that the provisions are punitive as well as compensatory, that is, the punitive aspect leading to compensation. It can be ascertained that the Legislature has made a remarkable move by bringing this amendment in the interest of speedy justice.
Thus, the applicability of the provision under Section 148 of the N.I. Act is mandatory. Deposit of fine not less than 20% is condition precedent for admission of appeal and provision under Section 357 (2) Cr.P.C. are not made applicable during admissibility and pendency of appeal. Section 148 of the N.I. Act can be applied to complaint filed prior to 1.9.2018 - there are no reason to interfere with the impugned order dated 23.10.2019 passed by the appellate sessions court directing the Appellants to deposit 30% of the amount of fine/compensation pending appeals.
Revision dismissed.
-
2020 (5) TMI 312
Dishonor of Cheque - insufficiency of funds - discharge of legally enforceable debt, arising from a chitty transaction - offence u/s 138 of NI Act - principles of natural justice - HELD THAT:- The Court below over looked the fact that the accused was the guarantor to the chitty transaction. The chitty transaction by the husband of the accused is not in dispute. On the other hand, the trend of the cross examination showed that PW1 was not cross examined at length and except making a vague suggestion that the cheque was not handed over by the accused, no further defence was setup - There is nothing on record to show that the husband and wife were at logger heads or that they were living separately. Her version that, the signature on the cheque was forged by the husband was not seen put to PW1 in cross examination. On the other hand, her contention is falsified from the very fact that, she has gone to the extent of stating that even the postal acknowledgment produced along with the complaint was forged and produced by the complainant themselves.
It seems that the court below did not correctly evaluate the evidence in its correct perspective. The court below did not take into consideration Exts.P3 to P6 documents - the matter needs to be considered afresh by the court below on the basis of the evidence already on record and the further evidence, if any, which both sides propose to adduce - Matter on remand.
|
