TMI Tax Updates - e-Newsletter
May 21, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Indian Laws
Highlights / Catch Notes
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GST:
Profiteering - After-Shave Lotion Park Avenue Good Morning 50 ml - It is established that both the above Respondents have acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and have not passed on the benefit of reduction in the rate of tax to their recipients by commensurate reduction in the prices.
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Income Tax:
Acceptance of payment otherwise than in Cash - the provisions of section 269SU of the Act shall not be applicable to a specified person having only B2B transactions (i.e. no transaction with retail customer/consumer) if at least 95% of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash.
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Income Tax:
ITAT committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided against him. The Appellant-assessee, as a Respondent before the ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings.
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Income Tax:
TP Adjustment - comparable selection - None of the comparables have been excluded on the ground of high turnover alone. The test of functional similarity applied by the Tribunal is in consonance with the legal position discussed hereinabove. No merit in the contentions urged by the Revenue on this ground. Equally meritless is the contention of the Revenue regarding the bar to challenge the comparables after the acceptance of the filters. The filters are applied to narrow down the search to find the comparables that are closest to the assessee. The use of filters has to be necessarily validated from the annual reports.
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Income Tax:
Deemed dividend addition u/s 2(22)(e) - There remains no dispute that the assessee has incurred interest expenses on the money borrowed from the company. Accordingly, we hold that there was no benefit derived by the assessee from such company on the money borrowed by him. - No additions can be made since, there was no benefit extended by the company to the assessee
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Income Tax:
Addition u/s 69A - Unexplained deposits in the bank account - The assessee is engaged in the business of readymade garments, therefore, taxing only the deposits without giving corresponding credits to the withdrawals, in my opinion, will be not justified in the instant case especially when the assessee is a small trader.
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Income Tax:
Deduction u/s 54F - Acquiring rights in property - Assessee in the instant case has not only been issued allotment letter, he has also made full payment to the authority concerned immediately thereafter. Thus, the asset is required to be held as long term capital asset even if the later date of payment is reckoned. - Gain being LTCG eligible for exemption.
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Income Tax:
Exemption u/s.54F - for all practical purpose, the vacant site adjacent to the existing building which was purchased by the assessee through the second sale deed also has to be construed as land appurtenant to the residential house. Hence the assessee is eligible for exemption u/s.54
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Income Tax:
Disallowance of depreciation and expenses in respect of the new car purchased - questioned car was registered in the name of the Director - the assessee company should be considered as owner for all practical purposes and hence it is entitled for depreciation.
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Income Tax:
Addition u/s 40A(3) being 20% of the amount paid - assessee was acquiring the land from the various farmers by paying cash to them and debiting it to the capital work in progress account. This sum was not claimed as an “expenditure‟ in the profit and loss account. - The whole transaction of purchase of land as well as transfer to the sister concern was not routed through profit and loss account but were shown in the balance sheet. - No additions.
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Corporate Law:
Taking into account the nature and gravity of the offence which shakes the conscience of the society and public at large, investigation being still pending and there are strong apprehension that there would be chances of tampering of evidence by the applicant, the prayer of the applicant for grant of immediate release till such time that pandemic COVID-19 (Corona Virus) is curtailed, is hereby refused
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IBC:
When once a case was admitted under the IBC, the only option available to a party as an "aggrieved person" is to prefer an "appeal" of course in accordance with law, against the "order of admission" already passed and not to prefer an application seeking stay of all the pending proceedings
Articles
Notifications
Customs-
08/2020 - dated
19-5-2020
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ADD
Seeks to impose anti-dumping duty on import of Sodium citrate originating in or exported from China RP for a period of further 5 years.
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45/2020 - dated
19-5-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
GST - States-
G.O.Ms.No.136 - dated
15-5-2020
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Andhra Pradesh SGST
Seeks to amend Notification G.O.Ms.No.258, Revenue (Commercial Taxes-II) Department, Dated 29.6.2017
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G.O.Ms. No. 135 - dated
15-5-2020
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Andhra Pradesh SGST
Seeks to amend Notification G.O.Ms.No.259, Revenue (Commercial Taxes-Il) Department, Dated 29.6.2017
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8/4/2020-LA - dated
15-5-2020
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Goa SGST
Goa Goods and Services Tax (Second Amendment) Ordinance, 2020
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01/2020 - State Tax (Rate) - dated
19-5-2020
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Jharkhand SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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(08/2020)-KGST.CR.01/17-18 - dated
6-5-2020
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Karnataka SGST
Seeks to extend the due date for furnishing of FORM GSTR 9/9C for FY 2018-19 till 30th September, 2020.
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07/2020-State Tax - dated
28-4-2020
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Kerala SGST
Extended due dates for filing of Kerala Flood Cess returns for the periods February, March and April 2020
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03/2020-State Tax (Rate) - dated
16-4-2020
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Tripura SGST
Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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02/2020-State Tax (Rate) - dated
16-4-2020
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Tripura SGST
Seeks to amend Notification No. 11/2017 - State Tax (Rate), dated the 29th June, 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (5) TMI 443
Refund of GST - It is stated that on the application of the applicant/petitioner for refund, the Assistant Commissioner, GST, Delhi (East) has passed an order dated 19th September, 2019 rejecting the application of the applicant/petitioner for refund - applicant/petitioner states that he is not aware of the said order, of which copy also has not been furnished to him - HELD THAT:- The order dated 19th September, 2019 would not be an impediment to the relief being granted in the writ petition and the hearing of the writ petition is not to await the outcome of the appeal against the order dated 19th September, 2019. It is contended that in the circumstances of this case no appeal against the order 19th September, 2019 is required to be filed - The counsel for the respondent GST is permitted to email the counter affidavit along with annexures to this Court. List the writ petition for hearing on 10th June, 2020.
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2020 (5) TMI 442
Profiteering - After-Shave Lotion Park Avenue Good Morning 50 ml - allegation that the benefit of reduction in the rate of tax not passed on by way of commensurate reduction in prices - contravention of provisions of section 171 of CGST Act - penalty - HELD THAT:- It is apparent from the perusal of Sub-Section 171 (1) that both the benefits of tax reduction and ITC are required to be passed on by the suppliers to the customers by commensurate reduction in the prices as they have been granted from the public exchequer to benefit the consumers. Sub-Section 171 (2) provides that the Central Government may on the recommendations of the GST Council constitute an Authority to examine whether the input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the prices of the goods or services or both supplied by him. Therefore, this Authority has mandate to examine all such cases in which the above benefits are required to be passed on either suo moto or to get them investigated through the DGAP and its power to do so is not restricted to only those cases or products in respect of which complaint has been made. It is also apparent from the provisions of Rule 129 (1) that the DGAP shall investigate and collect necessary evidence in all such cases in which the rate of tax has been reduced or the benefit of ITC has been granted which is required to be passed on to the buyers and submit his Report to this Authority under Rule 129 (6). During the course of the investigation the DGAP had further found that the Respondents had not passed on the benefit of tax reduction in respect of other products also which were being supplied by them inspite of tax reduction and therefore, he was legally bound to investigate and bring this infringement of Section 171 to the notice of this Authority. The Respondents cannot be allowed to deny benefit of tax reduction to their customers on the ground of jurisdiction and misappropriate the amount of benefit of tax reduction which they are not required to pay from their own pockets. Accordingly, the investigation conducted by the DGAP against the Respondent No.1 is in consonance with the provisions of Section 171 and the Rules framed under Chapter XV of the CGST Rules. 2017. It is established that both the above Respondents have acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and have not passed on the benefit of reduction in the rate of tax to their recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering in respect of the Respondent No. 1 is determined as ₹ 18,48,34,084/- including the GST under the provisions of Rule 133 (1) of the CGST Rules, 2017 as per Annexure-32 of the Report dated 24.09.2019 furnished by the DGAP - The Respondent No. 1 has also profiteered an amount of ₹ 8,97,2531- from the Respondent No. 2 as has been mentioned in Annexure-33 of the Report dated 24.09.2019. Since, the above amount is required to be passed on to the ultimate buyers hence, the same shall be deposited in the CWFs of the Central and the State Governments as per the provisions of Rule 133 (3) (C) of the CGST Rules, 2017 along with the interest and shall not be passed on to the Respondent No. 2 as he is not eligible to get the benefit of tax reduction at the expense of the common recipient. Both the Respondent are directed to reduce the prices of the impacted products as per the provisions of Rule 133 (3) (a) of the CGST Rules. 2017. keeping in view the reduction in the rate of tax so that the benefit of tax reduction is passed on to the recipients. The Respondents are also directed to deposit the profiteered amounts mentioned above along with the interest to be calculated @ 18% from the date when the above amounts were collected by them from the recipients till the above amounts are deposited, in terms of the Rule 133 (3) (b) of the CGST Rules, 2017. Since, the recipients in this case are not identifiable, the above Respondents are directed to deposit the above amounts of profiteering along with interest in the CWFs of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules. 2017 in the ratio of 50:50 along with interest @ 18% till the same are deposited. Penalty - HELD THAT:- It is also evident from the facts that both the above Respondents have denied the benefit of tax reduction from 28% to 18% w.e.f. 15.11.2017 to 31.03.2019, notified vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, on the products which were being supplied by them to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act. 2017 and have thus resorted to profiteering. Hence, they have committed an offence under Section 171 (3A) of the Central Goods Services Tax Act. 2017 and therefore, they are apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, Show Cause Notices be issued to them directing them to explain why the penalty prescribed under Section 171 (3A) of the Act read with Rule 133 (3) (d) of the Central Goods Services Tax Rules, 2017 should not be imposed on them. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was to be passed on or before 24.03.2020 as the investigation Report was received from the DGAP on 25.09.2019. However, due to the COVID-19 pandemic prevailing in the Country the order could not be passed on or before the above date. Hence, the same is being passed today in terms of the Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes Customs under Section 168 A of the Central Goods Services Tax Act, 2017.
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Income Tax
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2020 (5) TMI 441
Validity of the reassessment proceedings undertaken by the revenue u/s 153C - raising additional grounds u/s 27 of the ITAT Rules - assessee made an oral application under Rule 27 of ITAT Rules and urged additional grounds against the findings of the CIT(A) pertaining to the issue of recording of satisfaction note, and the necessary condition of existence of nexus between assessment and incriminating material by contending that these findings were in the teeth of the law as settled by various courts in respect of the said issues - HELD THAT:- Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not filed an appeal against the same, is entitled to defend such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an aggrieved party, as he had succeeded before the CIT (A) in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent assessee had accepted the findings in part of the final order, that was decided against him. When the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on any of the grounds decided against it. Assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided against him. The Appellant - assessee, as a Respondent before the ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings. We are, therefore, of the considered opinion that the impugned order passed by the ITAT suffers from perversity in so far as it refused to allow the Appellant assessee (Respondent before the Tribunal) to urge the grounds by way of an oral application under Rule 27. Decided in favour of the Appellant assessee and resultantly the impugned order is set aside. The matter is remanded back before the ITAT with a direction to hear the matter afresh by allowing the Appellant- assessee to raise the additional grounds, under Rule 27 of the ITAT Rules, pertaining to issues relating to the assumption of jurisdiction and the validity of the reassessment proceedings under Section 153C of the Act. - Decided against revenue.
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2020 (5) TMI 440
TP Adjustment - comparable selection - deletion of Infosys Ltd. as a comparable - HELD THAT:- Infosys Ltd., it possesses huge tangibles of more than ₹ 1,00,000/- Crores. It is a full-fledged risk bearer with a turnover of more than ₹ 12,000/- Crores. The functions of Infosys Ltd. are highly diversified, and branching out into product conceptualization, core design, research development to marketing and sales of products, etc. No such function is carried out by the assessee. Being a captive service provider, its function is completely confined to software development services for its AE. There are no intangibles owned by the assessee and it incurs no expenditure on research development. We find that these distinguishing factors are highly substantial and cannot be ignored or severed from the comparison. The contractual terms of the transaction will be heavily influenced by this and other factors, such as, the overall economic standing of Infosys Ltd. in the market, thereby affecting the cost of the transaction that it enters into - we are not inclined to interfere with the order of deletion of Infosys Ltd. as a comparable. Wipro Technology Services Ltd - main ground for exclusion of this comparable is that its entire revenue is on account of related party transactions and it fails the criteria of RPT filter - whether the pre-arrangement between the Citi group and Wipro Limited would make the subsequent rendition of services by this company to the Citi Group fall within the meaning of deemed international transaction as defined under section 92B(2)? - HELD THAT:- A perusal of the aforenoted provision shows that the transaction between an unrelated party and an enterprise would be deemed to be an international transaction if there was any prior agreement between the parties on the basis of which the transaction is being undertaken. There was indeed a prior agreement between Citi Group and the erstwhile Citi Technology Services for rendition of software services. After acquiring Citi Technology Services (now Wipro Technology Services) by Wipro Ltd, since the comparable company continues to deliver services to Citi Group, this entire transaction would be considered as a related party transaction. The pre-arrangement between Citi group and Wipro Ltd. is a deemed international transaction as per Section 92B (2). Therefore, we are of the considered view that this comparable has been rightly deleted since it is no longer an uncontrolled transaction and cannot serve as a comparable in the benchmarking mechanism for the present assessee, since the RPT filter of this company failed to meet the filter criteria of 25% of RPT, as applied by TPO. The Tribunal in a similarly situated case, deleted Wipro Technology Services Ltd, since it had ceased to be an uncontrolled transaction under Section 92B (2) of the Act. - The same order of deletion has been upheld by this Court in SAXO INDIA PVT. LTD. [ 2016 (10) TMI 501 - DELHI HIGH COURT] Persistent Systems Ltd. and Thirdware Solutions Ltd. , which were deleted on the ground of being functionally dissimilar to the assessee and on account of absence of segmental information with regard to their earnings and sales in the field of software development - HELD THAT:- These comparables have been excluded on the ground that apart from rendering software services, the companies are engaged in sale of software products and the segmental data of product and services is not available. Firstly, this is a finding of fact and secondly, in the grounds urged in the present appeal, the Revenue has not disputed this factual position. In the note of arguments filed by the appellant also, there is no challenge to this factual position. We would like to add that the respondent had brought to our notice that this Court in CashEdge [ 2016 (5) TMI 1348 - DELHI HIGH COURT] for the very same AY 2010-11 and in identical business vertical i.e. captive software development services had upheld the exclusion of Persistent Systems Ltd. With respect to Thirdware Solutions and Sales Limited, we find that the ITAT has undertaken a detailed factual analysis and has given cogent reasons for the exclusion of the comparables in question. The ITAT has noted that there is no segmental data to work out the separate margin from software services. Further, this comparable was also rejected in the case of assessee's sister concern, Fiserv India Ltd [ 2016 (1) TMI 1276 - DELHI HIGH COURT] on the ground of non-availability of segmental data. None of the comparables have been excluded on the ground of high turnover alone. The test of functional similarity applied by the Tribunal is in consonance with the legal position discussed hereinabove. No merit in the contentions urged by the Revenue on this ground. Equally meritless is the contention of the Revenue regarding the bar to challenge the comparables after the acceptance of the filters. The filters are applied to narrow down the search to find the comparables that are closest to the assessee. The use of filters has to be necessarily validated from the annual reports. - Decided against revenue.
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2020 (5) TMI 439
Waiver of interest charged u/s 234A, 234B and 234C - delay caused in filing the return - HELD THAT:- In the case of Bhanuben Panchal and Chandrikabel Panchal Vs. Chief Commissioner of Income Tax [ 2004 (3) TMI 35 - GUJARAT HIGH COURT] while examining the waiver of interest in the context of the death of the husband of the petitioner who was in a senile condition prior to his death, held that the delay caused in filing the returns on account of the delay in arranging for funds, would also qualify to be considered as unavoidable circumstances responsible for the delay in late payment of taxes and accordingly, waiver of interest would be granted to the extent of 75%. Utmost, the delay caused in filing the return if to be attributed to the impounding of the documents during survey proceedings, the interest under section 234-A for the default committed in filing the return of income would be waived of, but not the interest leviable u/s 234B and 234C, the default in payment of advance tax and for deferment of advance tax. Writ petition stands disposed of, with a direction to the respondent to waive of the interest under Section 234A of the Act relating to the assessment year 2010-11. Levy of interest under Section 234B and 234C is confirmed.
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2020 (5) TMI 438
Addition u/s 69A - unexplained cash deposits - AO found that the assessee has deposited in the saving bank account with ICICI Bank - HELD THAT:- The assessee filed day to day cash in hand position before me and submitted that earlier withdrawals were available with the assessee to deposit that amount and due credit to be given to such earlier withdrawals as available to deposit with bank account. According to the DR, the earlier withdrawals made by the assessee should not have redeposited with the bank account. The assessee submitted that the assessee withdrawn money from bank account for particular purposes, however, it was not kept idle and it was redeposited to bank account. The Assessing Officer did not accept the contention of the assessee since the assessee has not filed any fund flow statement or cash flow statement before him. AO has not examined the cash book to see that any cash balance is available with the assessee to redeposit the same in the bank account. AO has also not brought anything on record to show that the assessee has used the earlier withdrawals for his persons purposes and not for redeposit the same in the bank account. As presumed that the assessee has withdrawn cash and the same remains to be unutilized for one reason or the other and the cash remained with the assessee and used the same to deposit in the bank account. As decided in SHRI MATHEW PHILIP VERSUS THE INCOME TAX OFFICER, NON CORPORATE, WARD-1 (3) , RANGE-1, KOCHI. [ 2019 (11) TMI 1404 - ITAT COCHIN] AO has to examine the fund flow statement of the assessee and to re-examine the issue in the interest of justice. Accordingly, remit the issue to the file of the A.O. to give due credit towards the amount withdrawn by the assessee and kept idle and redeposited by the assessee into bank accounts. As inclined to direct the AO to give due credit to the opening balance of the year and also towards earlier withdrawals, after verifying the books of account of the assessee. - Appeal filed by the assessee is allowed for statistical purposes.
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2020 (5) TMI 437
Deemed dividend addition u/s 2(22)(e) - Assessee has accepted loan from M/s Shreem Design Infrastructure Pvt Ltd. (in short SDIPL) in which he is director and also holding 11.61% of equity share - HELD THAT:- Admittedly, the assessee has paid interest on the money borrowed from the company namely SDIPL. This fact can be established from the details such as TDS certificate issued by the assessee to the company for the deduction of TDS on the payment of interest to the company. There is also Ledger account of the assessee in the books of the company showing the amount of interest received from the assessee by the company. There remains no dispute that the assessee has incurred interest expenses on the money borrowed from the company. Accordingly, we hold that there was no benefit derived by the assessee from such company on the money borrowed by him. Provision of the deemed dividend under section 2(22)(e) of the Act, was brought under the statute to curb the practice of diverting the fund of the company for the benefit of the shareholders. However, in the case on hand there was no benefit extended by the company to the assessee. Thus, the impugned transaction is outside of the purview of the deemed dividend as envisaged under the provisions of section 2(22)(e) See assessee own case MOHAN BHAGWATPRASAD AGRAWAL[ 2019 (6) TMI 694 - ITAT AHMEDABAD] - Decided in favour of assessee.
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2020 (5) TMI 436
Disallowance of business loss being the amount of unrecoverable balances of brokers - non- recovery of the advances given to the brokers - HELD THAT:- AO for the instant year held that the assessee is dealing in speculative transactions and invoked provisions Section 43 (5) - AO has also held that the assessee has been carrying trade in commodity derivatives. Section 43 (5)(e) considers an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association shall not be deemed to be a speculative transaction. We hold that the transactions of the assessee shall not be deemed to be speculative transactions. Chapter VII of the Finance Act, 2013 w.e.f. 01 .04 .2014, details as to what is a commodity derivative in the Commodities Transaction Tax (CTT). As per the CTT commodity derivative means a contract for delivery of goods which is not a ready delivery contract or a contract for differences which derives its value from the prices of such underlying goods. We find that the assessee is in the business of commodity derivatives but not in the speculation transaction as held by the AO. The revenue has also accepted the income from the transactions of the assessee as business income but not as income from speculation for all the earlier years.) - Owing to collapse of the NSEL, no further trading could be conducted by the assessee in the latter years). It is also an undisputed fact that the trade advances given by the assessee stands irrecoverable. A tax history of the assessee , treatment given by the revenue to the transactions undertaken by the assessee, finding of the AO that the assessee is into commodity derivatives, provisions of the Section 43 (5) invoked by the AO, provisions of Section 43 (5)(e) relied upon by the ld. AR, Explanation (2) of Section 43 as to what constitutes commodity derivatives, Para 5 of Chapter VII of Finance Act, 2013, CBDT Circular No. 3/2006 dated 27.02.2006, orders of Megh Sakariya International [ 2018 (9) TMI 1961 - ITAT CHENNAI] , Omni Lens Pvt. Ltd. [ 2018 (10) TMI 1426 - ITAT AHMEDABAD] and case of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] we hereby hold that the business loss claimed by the assessee is allowable u/s 28 of the Act. - Appeal of the assessee is allowed
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2020 (5) TMI 435
Addition u/s 69A - Unexplained deposits in the bank account - alternate contention of assessee that only the peak credit should be added and not the entire deposits in the bank account since the corresponding withdrawals from the said bank account have not been considered - HELD THAT:- A perusal of the deposit and withdrawals in the said bank account filed by the assessee shows that there are systematic deposits as well as withdrawals. The assessee is engaged in the business of readymade garments, therefore, taxing only the deposits without giving corresponding credits to the withdrawals, in my opinion, will be not justified in the instant case especially when the assessee is a small trader. Since the peak credit comes to ₹ 7,70,390/-, therefore, modify the order of the CIT(A) and restrict the addition to ₹ 7,70,390/-. The grounds raised by the assessee are accordingly partly allowed.
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2020 (5) TMI 434
Deduction u/s 54F - Acquiring rights in property - period of holding of capital asset for the purposes of classification of capital gains is to be seen with reference to date of allotment of land or from the date of formal execution of sale deed for registration - as per assessee letter of allotment issued by BDA in respect of land parcel (Site no. 37) in question has given effective right to the assessee to assert its command on the asset which right is includible in the expression property for the purpose of s.2(14) - whether letter of allotment would give effective right over the capital asset pending execution of formal agreement spelling out all the exact terms and conditions for acquisition? - HELD THAT:- Hon ble Bombay High Court in the case of PCIT vs. Vembu Vaidyanathan [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] has taken note of CBDT circular no. 471 dated 15th October 1986 as well as CBDT circular 672 dated 16th Dec. 1993 and concluded that the assessee shall be deemed to have acquired rights in the property on the date of issue of allotment letter for the purposes of expression capital asset . Assessee in the instant case has not only been issued allotment letter, he has also made full payment to the authority concerned immediately thereafter. Thus, the asset is required to be held as long term capital asset even if the later date of payment is reckoned. Hence, the gains arising on sale of such asset has been correctly claimed as Long term capital gains. Consequently, all the benefits flowing from such gains would be entitled to the assessee. - Decided in favour of assessee.
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2020 (5) TMI 433
Exemption u/s.54F - AO found that since the assessee purchased the property by means of two registered sale deed, the property relating to second registered document may not be appurtenant to the building which was purchased through the original registered sale deed - HELD THAT:- The assessee has purchased the entire property within a span of 13 days in the month of February, 2015. An harmonious reading of the agreement for sale of the property and the registered sale deed clearly indicates that the assessee intended to purchase the entire property including the vacant land from the vendor Shri R. Selva Kumar. Two registered sale deeds were executed. There can be various reasons for executing the two sale deeds. One of the reason presumably as rightly submitted by the assessee that the vendor might have insisted for execution of two sale deeds in order to avoid deduction of tax at source. Whatever may be the reason the existing residential building as well as the vacant land adjacent to are appurtenant to each other. This Tribunal is of the considered opinion that the vacant site purchased by the assessee which is adjacent to the residential house is necessary for convenient enjoyment of the building. Therefore for all practical purpose, the vacant site adjacent to the existing building which was purchased by the assessee through the second sale deed also has to be construed as land appurtenant to the residential house. Hence the assessee is eligible for exemption u/s.54 - Appeal filed by the assessee stands allowed.
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2020 (5) TMI 432
Disallowance of depreciation and expenses in respect of the new car purchased - questioned car was registered in the name of the Director - HELD THAT:- As decided in EDWISE CONSULTANTS PVT. LTD. [2015 (12) TMI 297 - ITAT MUMBAI] depreciation is allowable in the hands of the company, even if it is registered in the name of its director provided that the vehicle is used for the purpose of business of company and income derived there from was shown as income of the company. In the instant case there is no dispute with regard to the fact that the vehicles are used for the purpose of business of the assessee company. the assessee company should be considered as owner for all practical purposes and hence it is entitled for depreciation - Decided in favour of assessee.
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2020 (5) TMI 431
Addition u/s 40A(3) being 20% of the amount paid - assessee was acquiring the land from the various farmers by paying cash to them - HELD THAT:- Disallowance u/s 40A(3) on identical facts and circumstances is decided by the several of the coordinate benches in the group cases holding that provisions of section 40A(3) does not apply to the facts of the case. The decision in case of Westland Developers Pvt. Ltd [ 2014 (12) TMI 254 - ITAT DELHI] has held that the provisions of section 40A(3) has been wrongly invoked as no expenses related to the addition has been claimed by the assessee but the amount was shown in the capital work in progress at the time of purchase of land which was reimbursed - assessee was acquiring the land from the various farmers by paying cash to them and debiting it to the capital work in progress account. This sum was not claimed as an expenditure‟ in the profit and loss account. Therefore, there was no question of claiming deduction of this sum. The land was acquired on behalf of the other company who paid the assessee through account payee cheque. Such sum was credited in the capital work in progress account. The whole transaction of purchase of land as well as transfer to the sister concern was not routed through profit and loss account but were shown in the balance sheet. On these facts, coordinate bench held that provision of section 40A(3) of the Act do not apply. Addition on account of additional payments made for purchase of land - HELD THAT:- Identical disallowances were made in case of the other group concerns and also in case of Westland Developers Pvt. Ltd [ 2014 (12) TMI 254 - ITAT DELHI] wherein as deleted the identical addition.
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Customs
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2020 (5) TMI 430
Issuance of license and allocation of quota qua Calcined Pet Coke - Request for allocation of CPC - limitation on quantum of CPC - HELD THAT:- Reliance placed in the case of M.C. MEHTA VERSUS UNION OF INDIA ORS. [ 2018 (11) TMI 1352 - SUPREME COURT ] where it was held that Calcined Pet Coke (CPC) (domestic as well as imported) can be used as raw-material for anode making in the Aluminium industry with the revised BIS specifications, the imported raw-material cannot exceed 0.5 MT per annum in total. Nothing survives in the captioned writ petition and the interlocutory application, and the same can, thus, be disposed of - The matter is, however, directed to be listed for compliance, at the request of counsel for parties, on 04.06.2020.
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Corporate Laws
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2020 (5) TMI 429
Bail application - applicant has chosen to file the present bail application under sections 439 Cr.P.C. for immediate release till such time that the pandemic COVID-19 (Corona Virus) is curtailed - main case of applicant is that due to Covid-19 (Corona Virus) infection, the applicants being a sick person has great risk to his life if he is kept in jail where there are much chances of he being infected by said Corona Virus - HELD THAT:- It is apparent that the Committee has resolved to release the under trial prisoners on interim bail, who are facing criminal cases in which the maximum sentence is of 7 years and presently confined in jails, for a period of eight weeks by the competent courts. Thus, the contention of Assistant Solicitor General Sri Gyan Prakash appearing on behalf of the respondent, who vehemently argued that the applicant is not entitled for bail/interim bail as per the order passed by the Apex Court Suo Motu in the aforesaid writ petition by which a High Powered Committee has been constituted as the case of the applicant is distinguishable from the under trial prisoners as the offence in which the applicant has been confined in jail is punishable with a maximum sentence upto 10 years, appears to have substance - Moreover, so far as the risk of applicant being infected due to Corona Virus because of his illness in the lack of following strict norms of social distancing measures including face to face interaction is concerned, it has been pointed by learned Assistant Solicitor General that the applicant is not such a sick person, who is not able to perform normal pursuits of his life as he is only suffering from urinary infection and stated to be having low blood sugar for which there is adequate facility of his treatment in the jail hospital and the applicant had himself admitted that he was admitted in the jail hospital on 27.3.2020. Taking into account the nature and gravity of the offence which shakes the conscience of the society and public at large, investigation being still pending and there are strong apprehension that there would be chances of tampering of evidence by the applicant, the prayer of the applicant for grant of immediate release till such time that pandemic COVID-19 (Corona Virus) is curtailed, is hereby refused - the prayer made in the present bail application for immediate release on bail till such time that pandemic COVID-19 (Corona Virus) is curtailed to the applicant, namely, Rahul Kothari is hereby rejected. Application dismissed.
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Securities / SEBI
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2020 (5) TMI 428
Public offer of shares - no private placement as per assessee company as per WTM - offer to more than 49 persons - violation of the provisions of the Companies Act - HELD THAT:- Evidence indicates that an invitation was made by the management of the company to selected persons for subscription or purchase by less than fifty persons. Such persons receiving the offer or invitation was not calculated directly or indirectly to be availed of by other persons, and consequently such invitation or offer could not be treated as an offer or invitation to the public. The finding of the WTM on this aspect is absolutely perverse. The reasoning given that merely because three allottees had made the complaints indicates that the offer or invitation falls in the category of one which is calculated to result directly or indirectly in the shares, debentures becoming available to persons other than those receiving those offer or invitation is based on surmises and conjectures. No evidence has come forward by these complainants or otherwise to show that the company had made a public offer other than these 49 persons. Allotment was made to less than fifty allottees. Once allotment is made to less than fifty allottees by way of private allotment the first proviso to section 67(3) clearly makes it a private issue and not a public issue. Consequently, there is no violation of the provisions of the Companies Act. The order of the WTM cannot be sustained and is quashed. The appeals are allowed.
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2020 (5) TMI 427
Shares acquired without making any public announcement - as per WTM Acquisition of the shares were against Regulation 3(2) of the SAST Regulations - HELD THAT:- Though a presumption that the promoters would be persons acting in concert can be raised the same can be rebutted either by positive evidence or by negative facts discernable through the conduct of the parties. The fact that the appellant Company did not participate in acquisition of additional shares by two of the other appellants, the fact that there is no resolution passed by the present appellant and fact that there is no communication on record from the appellant Company would show that present appellant Company cannot be termed as person acting in concert. The present appeal will have to be allowed. In the present case, what we find is that Appellant Nos.5 and 6 had not deliberately acquired the shares of the target Company but they were willy nilly required to accept the shares due to inability of the borrowers to repay the loan amount. Besides this the target Company was declared as sick Company under the BIFR and draft rehabilitation scheme was also under consideration. Thus, the act of the Appellant nos. 5 and 6 cannot be equated with corporate raiders trying to circumvent the provision of Regulation in order to seek control of the target Company. They were already promoters of the target Company and they had acquired the shares beyond the limits permitted by the creeping acquisition method. In the circumstances, the direction of the WTM cannot be sustained.
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Insolvency & Bankruptcy
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2020 (5) TMI 426
Substitution of the director of the Corporate Debtor - impleadment of interim resolution professional - CIRP Process - pre-existing dispute regarding the deficiency of goods and services - HELD THAT:- Prior to filing the application under section 9 of the Insolvency and Bankruptcy Code, 2016 before the Adjudicating Authority NCLT filed by the Respondent No. l/Operational Creditor has approached the Construction Equipment Rental Forum (CERA), of which only Respondent No. 1/Operational Creditor is a member vide email dated 9-1-2018 at Page 136 of the Paper Book through its official Mr. Mithlesh Kumar for resolving the existing dispute and wherein, it is claimed that the CERA which is only an association arbitrarily vide its e-mail dated 28-2-2018 at Page 264 directed the Appellant to unilateral release/pay an undisclosed, unjustified and arbitrary amount. As there was pre-existing dispute between the Parties and the Application under section 9 of Insolvency and Bankruptcy Code, 2016 filed on behalf of the Operational Creditor (Respondent No. 1) should not have been admitted and the Learned Adjudicating Authority not having considered the entire facts and the law in its correct perspective before passing the Impugned Order dated 8-11-2019 committed error - the Corporate Debtor/Appellant is released from the rigor of Corporate Insolvency Resolution Process and actions taken by IRP/RP and Committee of Creditors, if any, in view of the Impugned Order are set aside. IRP/RP will hand back the records and management of the Corporate Debtor to the promoters/directors of the Corporate Debtor. The matter is remitted back to the Adjudicating Authority to decide the fee and costs of 'Corporate Insolvency Resolution Process' payable to IRP/RP which shall be borne by the Respondent/Operational Creditor - Appeal allowed by way of remand.
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2020 (5) TMI 425
Seeking stay of the CIRP process - Corporate Debtor failed to make repayment of its dues - time limitation - main grievance of the appellant is that the Adjudicating Authority while passing the order on June 13, 2018 in section 7 application had omitted to consider and adjudicate as to whether the said petition was filed within the period of limitation - HELD THAT:- A mere glance of the ingredients of the section 61(1) and (2) of the I and B Code indicates that though any person aggrieved of an order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal, this Tribunal is of the earnest opinion that the present appeal preferred by the appellant is per se not maintainable in law because of the established fact that when once a case was admitted under the IBC, the only option available to a party as an aggrieved person is to prefer an appeal of course in accordance with law, against the order of admission already passed and not to prefer an application seeking stay of all the pending proceedings in C. A. No. 455 (PB) of 2018 filed in C. P. (I. B.) No. 160 (PB) of 2018 till its adjudication and dismiss the company petition. The instant appeal is dismissed as not maintainable but without costs.
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2020 (5) TMI 424
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - Whether the order of Decree passed by the Debts Recovery Tribunal-I, Hyderabad on 17th August, 2018 can be taken into consideration to hold that application under Section 7 of the I B Code is within period of three years as prescribed under Article 137 of Limitation Act, 1963? - HELD THAT:- If the period of limitation is counted from the date of default/ NPA then the period comes to an end in the year 2007. In such a case, the application under Section 7 of the I B Code is clearly barred by limitation. By filing an application under Section 7 of the I B Code, a Decree cannot be executed. In such case, it will be covered by Section 65 of the I B Code, which stipulates that the insolvency resolution process or liquidation proceedings, if filed, fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, attracts penal action - The Adjudicating Authority (National Company Law Tribunal) has failed to consider the aforesaid fact and wrongly held that the date of default took place when the judgment and Decree was passed by Debts Recovery Tribunal on 17th August, 2018. Thus, in absence of any acknowledgement under Section 18 of the Limitation Act, 1963, the date of default/ NPA was prior to 2004 and does not shift forward, therefore, the period of limitation for moving application under Section 7 of the I B Code was for three years, if counted, to be completed in the year 2007. As date of passing of Decree is not the date of default, we hold that the application under Section 7 of the I B Code was barred by limitation, though the claim may not be barred. Application dismissed - Corporate Debtor is released from all the rigors of Corporate Insolvency Resolution Process - appeal allowed.
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2020 (5) TMI 423
Maintainability of application - Applicant claiming himself to be the Financial Creditor has claimed to have paid an amount to the Corporate Debtor against the purchase of the land of the Corporate Debtor as earnest money - HELD THAT:- On perusal of the record, it is found that there is no agreement, as such, with regard to the sale and purchase between the Corporate Debtor and Applicant. In support of the contention, the Applicant has annexed E-receipt of transfer of funds as well as few counterfoil showing transfer of the amount in the account of Corporate Debtor viz. Digjam Ltd. Apart from these documents, no other document(s) is/are annexed, where from it can be deduced, that the amounts are paid against the agreement for the sale and purchase of land of Corporate Debtor. It is well settled that the offer and acceptance must be based or founded on three components - certainty, commitment and communication. If any one of the three components is lacking either in the offer or in the acceptance, there cannot be a valid contract - Applicant in this case totally failed to produce any document(s) in support of his claim which would make the Applicant even entitled in the category of other stakeholder Even if it is assumed for the time that the alleged letter dated 14-9-2018 of the Applicant is received by the Corporate Debtor, then even law does not cast a duty on the person to whom a proposal is made to reply to that proposal and hence acceptance cannot be inferred from the silence of the offeree and as a general rule, a proposal is not accepted by mere silence on the part of the offeree. The Applicant is claiming himself in the category of clause (f) of sub-section 8 of section 5 which speaks about any amount raised under any other transaction, including any forward sell or purchase agreement, having the commercial effect of borrowing - In the instant matter, the Applicant has failed to produce any documents/purchase agreement to substantiate his claim and/or show his bona fide as 'financial debt' so as to stand in the footing of Financial Creditor. The Applicant in the application pleaded that the amount is paid as earnest money. Basically, earnest money serves two purposes: it remains as security or earnest money for performance of the contract of sale but it becomes part of payment of the purchase money immediately on fulfilment of the contract, which is found absent in this case because of want of documents, such as, Contract Agreement for sale and purchase. Admittedly, there is no contract between the Applicant and Corporate Debtor. Application dismissed.
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2020 (5) TMI 422
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT:- It is noticed that the dispute prior to filing of this application was with respect to 10 pieces of damaged glass and the same has been claimed by the applicant to have been settled between the parties by issuance of credit note dated April 1, 2017 which is signed by authorised signatory of both the parties. It is undisputed that the invoices claimed to be due pertain to the period on or before August 21, 2015 being the date of the last invoice of the bunch of invoices asserted to be unpaid, which should normally have been cleared within 7 days. It has been argued by the operational creditor that the amount claimed are not barred by limitation as a fresh period of time should be reckoned from April 1, 2017 the date of the credit note issued by the operational creditor in favour of the corporate debtor - rejecting an application merely on non-filing of memorandum of appearance in accordance with rule 45 of the NCLT Rules, 2016 would hamper justice, in view of the fact that the substantive content of the pre scribed form has been complied with. Hence, the objection of the corporate debtor, in this regard, warrants no further consideration. While the date of the credit note falls within prescribed period for the purposes of limitation, there is no admission of liability or statement or implication of intention to pay. Thus, a fresh period of limitation cannot start from the date of the credit note. Under the circumstances, the filing of the application on January 7, 2019 beyond the period of three years as per article 137 of the Limitation Act, 1963 against the date of default on August 28, 2015 is not maintainable and cannot be sustained. The application is barred by limitation and is dismissed.
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2020 (5) TMI 421
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of default or not - time limitation - only defence taken by the respondent is that the debt being barred by limitation an application under section 7 of the Code could not be maintained - HELD THAT:- In view of the order of the DRT-I the debt became due and payable with effect from August 17, 2018. The present petition was filed on March 25, 2019 within three years of the date of the order. An application under section 7 can be filed within 3 years as provided under article 137 of the Limitation Act - Admittedly the respondent had committed default in payment of the debt. In view of the orders of the DRT-I, Hyderabad the debt became due and payable subsequent to August 17, 2018. Therefore, the defence contention that the debt was time barred cannot be accepted. The issue is answered in the negative. Existence of default or not - HELD THAT:- In an application under section 7 of the Code the reason for the inability of the respondent in paying off the debt is not required to be looked into by the Adjudicating Authority. What is required to be seen is the default - In this case the default has been satisfactorily proved. Thus the petition needs to be admitted. Petition admitted - moratorium declared.
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Indian Laws
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2020 (5) TMI 420
Detention of detenue - llicit trafficking of narcotic drugs and psychotropic substances - HELD THAT:- Under Clause (5) of Article 22 of the Constitution of India, the Authority making an order of preventive detention is required to afford an opportunity to the detenue to make a representation against the order of detention. As far as law relating to representation is concerned, it is fairly well settled. Non-consideration of the representation made by the petitioner against the order of detention - HELD THAT:- There is absolutely no explanation forthcoming for not forwarding the representation dated 15th April 2020 to the Specially Empowered Officer who had passed the impugned order. Even the representation dated 17th April 2020 made by the petitioner to the Central Government through the Superintendent of Central Prison was not forwarded to the Central Government immediately but the same was forwarded on 20th April, 2020 and it is specifically stated that the same was decided on 30th April 2020. The delay from 20th of April to 30th April 2020 has not been explained at all - Thus, the only conclusion which can be drawn is that there is an inordinate delay in considering the representations made by the petitioner to the Specially Empowered Officer as well as to the Central Government. In fact, there are no efforts made to explain the reasons for such inordinate delay. Hence, there is a complete violation of rights of the petitioner under Article 22 of the Constitution of India and in particular Clause (5) thereof. On account of the inordinate delay in deciding the representations made by the petitioner, the continuation of impugned order of preventive detention is vitiated and therefore the impugned order of detention will have to be set aside. Impugned order set aside - the petitioner/Mr. Kenneth Jideofor shall be set at liberty forthwith by the Bengaluru Central Prison, if he is not required in connection with any other case - petition allowed.
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2020 (5) TMI 419
Appointment to the Group 'C' post of Greaser in the Customs Marine Wing falling within the jurisdiction of the Customs Gujarat Zone in pursuance of the Recruitment Notification dated 11.09.2017 - HELD THAT:- There is no dispute regarding the fact that the petitioner had participated in the recruitment process in pursuance of the advertisement issued by the respondents and that his name was not reflected in the list of successful candidates declared on 26.02.2018. Considering the fact that the petitioner has chosen to approach this court after a period of more than two years, without issuing any notice to the other side, we permit the petitioner to approach the respondents with a request to disclose the outcome of the vigilance inquiry undertaken by the respondents in which the petitioner had also participated either by filing an application under the Right to Information Act or by filing a fresh representation as the case may be - On such application / representation being made, the respondents shall furnish necessary reply to the petitioner in respect of the vigilance inquiry undertaken by the respondents within FOUR WEEKS from the date of receipt of such application or representation from the petitioner. Petition disposed off.
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2020 (5) TMI 418
Extension of period of limitation prescribed under the general law or Special Laws - prevailing Covid-19 Virus pandemic situation in India - HELD THAT:- To obviate the difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings - this order is a binding order within the meaning of Article 141 on all Courts/Tribunals and authorities. This order may be brought to the notice of all High Courts for being communicated to all subordinate Courts/Tribunals within their respective jurisdiction - Issue notice to all the Registrars General of the High Courts, returnable in four weeks.
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2020 (5) TMI 417
Extension of Interim stay - extremely limited functioning of courts due to pandemic covid-19 situation and lockdown - HELD THAT:- Since some of the restrictions imposed by the Government of India are still in operation, and taking note of the extraordinary circumstances, in continuation of this Court s order dated 25th March, 2020, we hereby order that in all matters pending before this Court and Courts subordinate to this Court, wherein the interim orders issued, as mentioned in our order dated 25th March, 2020, were subsisting as on 15.05.2020 and expired or will expire thereafter, the same shall stand automatically extended till 15.06.2020 or until further orders, except where any orders to the contrary have been passed by the Hon ble Supreme Court of India in any particular matter, during the intervening period. Registry is directed to list this matter on 15.06.2020 for further directions.
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