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TMI Tax Updates - e-Newsletter June 8, 2021 Case Laws in this Newsletter: GST Income Tax Corporate Laws Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax Wealth tax Indian Laws Highlights / Catch Notes GST: Levy of GST - carrying on the business of a race club, which includes lay-out and preparing any land for running of horse races, steeplechases of races of any other kind - entire bet amount received by the totalisator - the petitioners are liable for payment of GST on the commission that they receive for the service that they render through the totalisator and not on the total amount collected in the totalisator - HC Visit to Get Source GST: Refund of GST from the electronic cash ledger - There is a default in compliance of Rule 90(1) read with para 2(d) of Circular No.79, and since the acknowledgment in FORM GST RFD-02 was not issued within 15 days, the order under challenge is set aside and the matter is remanded back to the 1st respondent to deal with the request of the petitioner in all respects, in accordance with law - HC Visit to Get Source Income Tax: Seeking return of original documents seized from the petitioner at the time of search - This Court is of the opinion that for issuing a direction to the respondent, it is mandatory for the petitioner to approach the respondent with appropriate application. When the respondent filed a counter affidavit stating that the petitioner has not even approached the respondent for such release as such sought for in the present writ petition, then this Court cannot consider the relief. - HC Visit to Get Source Income Tax: Unexplained cash credit u/s 68 - AO was free to make the necessary enquiry and addition under section 68 in the hands of the recipient were unjustified. Furthermore, assessee has also paid interest to the lenders. It has also deducted tax at source. Loan have been duly repaid, some part has been repaid even in the present assessment year. In these circumstances, in our considered opinion assessee has discharged the onus. - AT Visit to Get Source Income Tax: Grant received from holding company as capital receipt - AO has not specifically invoked section 56(2). The dubious method adopted by the assessee of claiming the utilisation of grant as deduction from taxable income without offering the corresponding grant as income cannot be brushed aside on the claim that it is not debited to profit and loss account. As in substance the assessee is claiming the utilisation of grant as deduction in the computation of income. - The amount received from the holding company cannot be allowed to be treated as exempt if the utilisation out of it is allowed as deduction from the total income chargeable to tax. The assessee cannot treat the grant as its not taxable income and at the same time claim utilisation out of it as a deduction from total income. - AT Visit to Get Source Income Tax: Unexplained share application and Share Premium - Addition u/s 68 - The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. - No additions - AT Visit to Get Source Income Tax: Addition on noting made in scribbling pad found and seized - AO ought to have considered the entire material available in the diary in toto together with the explanation offered by the assessee. If the AO had considered entire material i.e., diary along with the explanation offered by the assessee, there is no case for making the addition in the instant case. - AT Visit to Get Source Income Tax: Addition made towards interest expenses claimed - assessee derived income from letting out the properties i.e. rental income, which has been shown as income from operations in the P&L Account - As the interest expenses incurred on the borrowing which are utilized for acquiring the assets, income derived from which is credited to P&L account and offered to tax. There is a direct nexus between the income offered and the expenditure claimed. - AT Visit to Get Source Corporate Law: Levy of fine / penalty - Failure to file the copies of the Annual Returns with the Registrar of Companies, Maharashtra, Mumbai within prescribed time - bona fide delay without any mala fide intention - The applicant Company is directed to pay ₹ 50,000/- per day from the date of Default and the Directors herein shall be liable to pay fine of Rs. Fifty Thousand/- each by the 2 Directors herein i.e. in total ₹ 1,50,000/- shall be sufficient as a deterrent for not repeating the impugned default in future. - Tri Visit to Get Source Indian Laws: Dishonor of Cheque - payment of compensation or fine - proceedings contained in chapter XVII of the Negotiable Instruments Act - Quasi criminal proceedings or not - The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, the sentence of imprisonment can be modified inlieu of compensation paid which is twice the amount of the cheque. - HC Visit to Get Source Indian Laws: Dishonor of Cheque - standard of proof for rebuttal presumption - The accused has discharged the burden under Section 118(a) and 139 of the Negotiable Instrument Act satisfactorily by probablising valid defence and when the burden having been discharged, the evidential burden had shifted and moved on to the complainant which, he had failed to prove and therefore, the presumption under Section 118(a) and 139 of the Negotiable Instrument Act will not come again to the aid or rescue of the complainant - HC Visit to Get Source Indian Laws: Bribe - demand or solicitation of money from the complainant or not - Assistant commissioner, Sales Tax - During the course of hearing of the appeal on 28.02.1996, the appellant allegedly demanded ₹ 4000/- as bribe for deciding the said appeal in his favour. - the prosecution has failed to prove its case against the appellant beyond a reasonable doubt. - HC Visit to Get Source IBC: Interim direction to allow the petitioner to operate its bank account - siphoning off of funds while CIRP proceedings are ongoing - unfreezing of attached Bank Accounts - Freezing of all the bank account as indicated would certainly cause unnecessary hardship, which may not be necessary for the investigation of the present FIR in view of the nature of accusation made therein as well as in view of the offer made by the petitioner to furnish a bond - the petitioner is entitled to the interim relief as sought for. - HC Visit to Get Source Service Tax: Levy of service tax - food that is ‘taken away’ or collected from restaurants or eateries, in parcels - Once processed and readied for delivery, the parcels are brought to a separate counter and are picked up either by the customer or a delivery service. More often than not, the take-away counters are positioned away from the main dining area that may or may not be air-conditioned. In any event, the consumption of the food and drink is not in the premises of the restaurant - the provision of food and drink to be taken-away in parcels by restaurants tantamount to the sale of food and drink and does not attract service tax under the Act. - HC Visit to Get Source Articles ECONOMY & BANKING AMID COVID Key Changes in the Provisions of Income Tax Act, 1961 effective from 1st April 2021 and onwards Notifications GST - States 14/2021-State Tax - dated 17-5-2021 - Gujarat SGST Extension in compliances falling during 15.04.2021 to 30.05.2021 till 31.05.2021 13/2021-State Tax - dated 17-5-2021 - Gujarat SGST Gujarat Goods and Services Tax (Third Amendment) Rules, 2021 10/2021-State Tax - dated 17-5-2021 - Gujarat SGST Extension in due date of GSTR-4 for FY 2020-21 till 31.05.2021 09/2021-State Tax - dated 17-5-2021 - Gujarat SGST Waiver of late fees of GSTR-3B for March-April 2021 amending Noti. No 76-2018 08/2021-State Tax - dated 17-5-2021 - Gujarat SGST Amendment in Notification No. 13/2017-State Tax, dated 30th June, 2017 G.O. Ms. No. 3/2021-Puducherry GST (Rate) - dated 2-6-2021 - Puducherry SGST Amendment in Notification G.O. Ms. No. 9/2019-Puducherry GST (Rate), dated 31st March, 2019 G.O. Ms. No. 2/2021-Puducherry GST (Rate) - dated 2-6-2021 - Puducherry SGST Amendment in Notification G.O. Ms. No. 11/2017-Puducherry GST (Rate), dated 29th June, 2017 G.O. Ms. No. 1/2021-Puducherry GST (Rate) - dated 2-6-2021 - Puducherry SGST Amendment in Notification G.O. Ms. No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017 G.O. Ms. No. 13 - dated 31-5-2021 - Puducherry SGST Puducherry Goods and Services Tax (Fourth Amendment) Rules, 2021 F.12 (1)FD/Tax/2021-09 - dated 24-5-2021 - Rajasthan SGST Rajasthan Goods and Services Tax (Fourth Amendment) Rules, 2021 Circulars / Instructions / Orders SEBI - SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/573 - dated 7-6-2021 Potential Risk Class Matrix for debt schemes based on Interest Rate Risk and Credit Risk News New, Taxpayer-friendly e-filing Portal of the Income Tax Department To Be Launched on 7th June, 2021 Case Laws: GST 2021 (6) TMI 230 Valuation - Levy of GST on gross amount - constitutional validity of Rule 31A(3) - - carrying on the business of a race club, which includes lay-out and preparing any land for running of horse races, steeplechases of races of any other kind - entire bet amount received by the totalisator - Validity of amendments dated 25-01-2018 which inserted Rule 31A(3) to the CGST Rules - HELD THAT:- The Government has used the word totalisator . Therefore, it becomes necessary to consider what is a totalisator . The word totalisator ordinarily means a system of betting on horse races in which the aggregate stake, less an administration charge and tax, is paid out to winners in proportion to their stakes. This software installed will have number of terminals handled by the staff of the petitioners. The totalisator keeps a record of the amount punted by the punter, automatically retains certain percentage towards commission of the petitioners and taxes thereon. It even depicts the amount collected in the totalisator which would be available for distribution among the winner who placed his stake. A punter who wishes to bet pays certain amount of money through these terminals for backing a particular horse. A receipt is issued representing the monies put in by the punter on the horse that he has backed. There ends the work performed by the petitioners through the totalisator . In the case at hand, the amount that gets into the totalisator is not the prior determined face value of the entire bet, which is before the beginning of the race and exit of it from the totalisator after the race is over by paying the money to its last pie to the winner of the stake can neither be construed to be business, consideration, goods or supply as defined under the Act, as the amount that lies in the totalisator is only for a brief period which is held by the petitioners/Race Club in its fiduciary capacity. All that the petitioners would become liable for payment of tax under the Act is the commission that it receives for rendering service of holding the bet in the totalisator for a brief period in a fiduciary capacity. Though the Apex Court has considered what is actionable claim qua sale of a lottery ticket that would be inapplicable to the case at hand as the challenge before the Apex Court and the answer was on a different facts and circumstances. Therefore, the supply of an actionable claim as indicated in the Rule cannot include the entire amount brought into the totalisator. The totalisator is brought under a taxable event without it being so defined under the Act nor power being conferred in terms of the charging section which renders the Rule being made beyond the provisions of the Act. The same follows to the impugned KSGST Rules which are identical to the impugned CGST Rules. Therefore, Rule 31A(3) which does not conform to the provisions of the Act will have to be held ultra vires the enabling Act and consequently opens itself for being struck down. The issue is answered in favour of the petitioners striking down Rule 31A(3) of the CGST Rules and Rule 31A of the KSGST Rules as being contrary to the CGST Act and hold that the petitioners are liable for payment of GST on the commission that they receive for the service that they render through the totalisator and not on the total amount collected in the totalisator - petition allowed. 2021 (6) TMI 228 Refund of IGST and cess - HELD THAT:- Counter-affidavit(s) will be filed within five weeks from today. Rejoinder(s) thereto, if any, will be filed before the next date of hearing - Issue notice - List the matter on 26.08.2021. 2021 (6) TMI 227 Seeking grant of anticipatory bail - offences under Section 132 (1) (b) (c) punishable under Section 132 (1) (i) of the Central Goods Service Tax Act, 2017 - HELD THAT:- Mr. Saurabh Goel, Advocate, who is also appearing through video conferencing, accepts notice on behalf of the respondent-complainant. List again on 24.08.2021 - Meanwhile, in the event of arrest, the petitioner be released on interim bail subject to her furnishing personal bonds and surety to the satisfaction of Arresting/Investigating Officer. However, the petitioner shall join the investigation as and when called upon to do so and shall abide by the conditions as provided under Section 438 (2) Cr.P.C. 2021 (6) TMI 216 Refund of GST from the electronic cash ledger - it is submitted that once an acknowledgment is issued in respect of the refund application, no deficiency memo can be issued - HELD THAT:- There is a default in compliance of Rule 90(1) read with para 2(d) of Circular No.79, and since the acknowledgment in FORM GST RFD-02 was not issued within 15 days, the order under challenge is set aside and the matter is remanded back to the 1st respondent to deal with the request of the petitioner in all respects, in accordance with law, within a period of two to three weeks from 25.11.2020. Petition allowed by way of remand. Income Tax 2021 (6) TMI 229 Recovery proceedings - attachment orders - title deed seized by the respondents/revenue in exercise of the powers contained under Section 132(1)(c)(iii) - petitioner points out that, immovable properties can only be attached, albeit, provisionally by the respondents/revenue, if they choose to do so by exercising powers under Section 132(9B) of the Act, and not under Section 132(1)(c)(iii), as is sought to be done - HELD THAT:- As revenue, says that via the order dated 19.04.2021, the Court directed the concerned officer to ascertain, as to whether the aforementioned 10 properties were disclosed in the income tax returns filed for the relevant AYs, and therefore, the said exercise was carried out. We are of the view that the first step that the concerned officer needs to take to expedite the proceedings is, to submit the appraisal report concerning the search to the petitioner s AO. Therefore, while we are issuing notice in the captioned application, the concerned officer is also directed to submit the appraisal report to the petitioner s AO within the next ten days. Revenue will also get the 7 properties, referred to hereinabove (apart from the 10 properties which are reflected in the subject title deeds), valued, so that one has an idea as to what is the security available to the respondents/revenue. Accordingly, issue notice. Mr. Hossain accepts service on behalf of the respondents/revenue 2021 (6) TMI 225 Seeking return of original documents seized from the petitioner at the time of search - immovable property under attachment - HELD THAT:- At no point of time, any representation was made by the petitioner for release of the seized documents before the appropriate officer viz., The Commissioner of Income Tax, Central Circle-I, Chennai. In the absence of any representation by the petitioner for release of seized documents, the writ petition cannot be entertained. This Court is of the opinion that for issuing a direction to the respondent, it is mandatory for the petitioner to approach the respondent with appropriate application. When the respondent filed a counter affidavit stating that the petitioner has not even approached the respondent for such release as such sought for in the present writ petition, then this Court cannot consider the relief. Thus, the writ petition is not entertainable. 2021 (6) TMI 224 Recovery proceedings - Challenge Auction Sale Notice - HELD THAT:- As decided in JANATA SAHAKARI BANK LTD., AUTHORIZED OFFICER, TAX RECOVERY OFFICER, M/S. NEPC AGRO FOODS LIMITED, PUNE [ 2019 (1) TMI 1894 - MADRAS HIGH COURT] when the matter is taken up for hearing, the learned counsel for the petitioner submitted that since no auction was conducted pursuant to the sale notice the Writ Petition has become infructuous. In view of the submission made by the learned counsel for the petitioner, the Writ Petition is dismissed as infructuous. In the abovesaid writ petition also, the writ petitioner has challenged the Auction Sale Notice issued by the authorities. As the facts are similar in respect of the writ petition on hand, the said order of the Hon'ble Division Bench of this Court, is to be followed. 2021 (6) TMI 214 Disallowance of deduction u/s.10B - assessee failed to adduce necessary evidence to the effect that the approval granted by the Development Commissioner of STPI was ratified by the board of approval for EOU scheme and since this is a crucial requirement envisaged under section 10 B of the Act, he, accordingly, disallowed the entire claim of deduction under section 10B - entitlement of the assessee to make a request to consider the case under section 10A of the Act instead of section 10B - HELD THAT:- In view of the similarity of the facts and we find it just and proper to accept the contention of the assessee in the light of the additions referred to above and set aside the impugned order and remand the issue to the file of the learned Assessing Officer with a direction to the examine the claim of the assessee u/s 10A of the Act. We accordingly, set aside the impugned order and remand the issue to the file of the learned AO to comply with the above observations. We find it is not necessary to adjudicate the grievance of the assessee in respect of the requirements of section 10B (3) and also the invocation of section 10B (7) read with section 80IA . Assessee is free to raise all the contentions before the assessing officer and the AO, while considering the contentions of the assessee in the light of the above additions, is free to take a fresh view on this aspect Appeal of the assessee is allowed for statistical purpose. 2021 (6) TMI 213 TP Adjustment - adjustment on account of management services fees - CIT-A deleted the addition - DR argued that deductibility of expenditure in the context of normal provisions such as section 37 of the Act cannot be applicable to the transactions between associated enterprises governed by the transfer pricing provisions - HELD THAT:- We note that in order to arrive at such conclusion this Tribunal placed reliance in A.Y. 2013-14 in assessee s own case vide its order dated 04-07-2019 [ 2019 (7) TMI 1826 - ITAT PUNE] wherein, the Tribunal upheld the order passed by the CIT(A) deciding the similar issue in favour of the assessee for A.Y. 2013-14. Therefore, the order of CIT(A) is justified. Thus, the grounds raised by the Revenue are dismissed. 2021 (6) TMI 212 Accrual of income - interest earning from fixed deposits made from grant in aid - CIT-A deleted the addition - HELD THAT:- The Government directive which has been relied upon by him is duly applicable for the current assessment year. As per the said direction the interest on unutilised grant has to be treated a part of the grant itself. Hence, it cannot be subject to tax by the Revenue. In this view of the matter, there is change in circumstances and the ITAT order relied upon by the Assessing Officer is not at all applicable. As at that time there was no direction for such treatment. Further submission and case laws referred by the learned Counsel of the assessee is duly applicable on the facts and circumstances of the case. Nothing was brought before us referring the cogent finding of learned CIT(A). Hence, we uphold the order of learned CIT(A). Unutilized revenue grant - AO treated the entire Revenue grant received as the income of the appellant in the year of receipt and accordingly, made an addition - CIT-A deleted the addition - HELD THAT:- We find that policy of accounting for grant on receipt in current liability has been accepted by the Revenue in the earlier year. The utilisation of the same is duly accounted for. The unutilised grant is accepted in liability. Having accepted the above policy earlier the Assessing Officer is taking a different view in the current year. We agree with learned CIT(A) that on the principle of consistency the Assessing Officer s action is not justified without pointing out why contrary view from earlier year is being taken. Hence, we uphold the order of learned CIT(A). - Revenue appeal dismissed. 2021 (6) TMI 211 Unexplained cash credit u/s 68 - assessee obtained from dubious companies providing accommodation entries and having no justified financial for lending such money - grievance of the assessing officer is that these companies do not have substantial income and hence are not capable of giving loans - HELD THAT:- We find that the funds position of the companies as noted by the ld.CIT(A) is quite capable of granting loans. The adverse inference drawn from the financial statement of lending companies is only a surmise by the assessing officer without making any enquiry. As in the case of Pr.CIT vs Veedhata Tower Pvt.Ltd, [ 2018 (4) TMI 1004 - BOMBAY HIGH COURT] has held that when all the necessary details of the fund provider was available with the assessing officer, he was free to make the necessary enquiry and addition under section 68 in the hands of the recipient were unjustified. Furthermore, assessee has also paid interest to the lenders. It has also deducted tax at source. Loan have been duly repaid, some part has been repaid even in the present assessment year. In these circumstances, in our considered opinion assessee has discharged the onus. AO has not brought on record any cogent material to make the addition as unproved cash credit. Hence, the addition made by the assessing officer is not sustainable. No infirmity in the order of Ld.CIT(A) regarding deletion of addition on account of loan. Accordingly, we are uphold the same. Addition on account of deduction claimed by the assessee for interest payment on unexplained unsecured loan from dubious lenders - Since, we have already held that addition of loan as unexplained credit is not sustainable, the disallowances of interest thereon, on the same reasoning is liable to be deleted. Hence, we uphold the order of the Ld.CIT(A) on the issue also. Revenue appeal dismissed. 2021 (6) TMI 204 Disallowance made out of marketing, sales and distribution expenses - CIT-A deleted the addition - HELD THAT:- There is no dispute about the basic fact that the assessee had indeed paid the impugned sum to its sister concern and that too, without even applying for the relevant sanction containing the approval dated 4.1.2012 qua to the period of 4 years from 7.7.2010 to 31.3.2014 only whereas we are in FY 2009-10 having accounting period up to 31.3.2010. CIT(A) s impugned reasoning is not found to be sustainable therefore. Coupled with this, there is also no material as to whether the assessee had in fact applied for the necessary approval regarding its transactions/payments to its sister concern executed between 1.4.2009 to 31.3.2010. We thus find no reason to uphold the CIT(A) s impugned reasoning to this effect. This Revenue s argument is accepted in principle. Yet another equally important aspect of interplay of section 292/ 297 of the Companies Act vis- -vis sec.40A(2)(b) of the Act dealing with expenses or payments made to the interested parties. It is not in dispute that this issue has nowhere been examined. The same is restored to the CIT(A) therefore to be adjudicated afresh within three effective opportunities of hearing. Revenue s appeal accepted for statistical purposes. CIT(A) s action upholding the disallowance relevant to the current year and not related to FY 2009-10 on account of its failure in filing the corresponding details in remand proceedings - Assessing officer had disallowed an amount @ 20% as claimed at assessee s behest. The CIT(A) s lower appellate order under challenge has resulted in enhancement thereof in above terms; and that too, without even issuing corresponding notice stipulated in sec.251 (1)(a) of the Act. We thus reverse the CIT(A) s impugned directions and restrict the impugned disallowance to the extent of ₹ 21,45,440/- only in these facts and circumstances. Assessee s cross appeal partly accepted. 2021 (6) TMI 203 Unexplained advance Payments - as argued assessee had not made any payment as it was the other person i.e., Sri Vellampalli Chenchu Venkata Rama Rao having incurred the entire expenditure in favour of Sri Gorantla Radha Krishna towards sale agreement - HELD THAT:- The un-disputed fact that emerges herein is that both the learned lower authorities have assessed the assessee qua the sum in issue of ₹ 1.25 lakhs going by agreement entered along with Sri Vellampalli Chenchu Venkata Rama Rao (co-vendee) and paid to Sri Gorantla Radha Krishna for purchase of immoveable property in the relevant previous year. The assessee s stand has denied to have made any payment all along. He has also sought to shift the entire payments burden on the co-vendee as well. We find during the course of hearing that the corresponding agreement nowhere formed part of record as well which could suggest anything to this effect. Learned counsel has also not pleaded that the said agreement had further specified share of the immoveable property between assessee and the other covendee to the extent of less than half each. The only inference that could be drawn in absence of any such evidences or a clause having earmarked payment; vendee-wise, leads to the conclusion that both of them have incurred equal amount of expenditure of ₹ 1,25,00,000/- each forming subject matter of the impugned addition. The assessee tried to further place reliance on the covendee s affidavit dt.07-01-2019 i.e., much after the CIT(A) s lower appellate order and that too, in absence of any such material evident from the agreement. We thus confirm both the lower authorities action making the impugned addition in assessee s hands. Assessee s appeal is dismissed. 2021 (6) TMI 202 Disallowance of salary provisions u/s. 43B(f) - provision for leave salary was disallowed by the Assessing Officer by holding that the leave salary is contingent in nature - AO observed that the leave salary may or may not be encashed by the employees in future date as some of the employees may actually take leave. Hence he made the disallowance of the provision under section 43B(f) - CIT(A) deleted the addition - HELD THAT:- As decided in the case of the appellant's group company Aditya Birla Nuvo Ltd. [ 2014 (8) TMI 1032 - ITAT MUMBAI] leave salary is not attracted by Section 43B(f), Further, as per Explanation 2 to Section 43B, the leave encashment must be both due and payable to be disallowed under Section 43B. - Decided in favour of assessee. Grant received from holding company as capital receipt - As per revenue the same was not used for creating any capital asset but was used to pay salary to the director - assessee has treated the amount received from its holding company as a tax-free grant and at the same time treated the utilisation out of it as an expenditure in its computation of income - HELD THAT:- It is not the issue of taxability or the chargeable of the receipt in isolation. But the claim of deduction for utilisation of the so-called exempt grant which has to be considered alongwith. This is the actual subject matter of debate over here. Hence this claim of the learned counsel of the assessee that assessing officer has quoted wrong section is not at all sustainable. Moreover, it is settled law that quoting a wrong section is not fatal. AO has not specifically invoked section 56(2). The dubious method adopted by the assessee of claiming the utilisation of grant as deduction from taxable income without offering the corresponding grant as income cannot be brushed aside on the claim that it is not debited to profit and loss account. As in substance the assessee is claiming the utilisation of grant as deduction in the computation of income. CIT(A) has completely erred in this regard. The amount received from the holding company cannot be allowed to be treated as exempt if the utilisation out of it is allowed as deduction from the total income chargeable to tax. The assessee cannot treat the grant as its not taxable income and at the same time claim utilisation out of it as a deduction from total income. Hence, we are of the considered opinion that the sum has been rightly brought to tax in as much as its utilisation as remuneration has been claimed and allowed as deduction. The effect of this addition/disallowance is assessee s dubious act of not having claimed the expenditure/utilisation of grant ostensibly though profit and loss account but claiming it though deduction in computation of income surreptitiously is nullified. Hence, we set aside the orders of learned CIT(A) and allow the Revenue s appeal on aforesaid reasoning. Disallowance of loss on forward contracts - no benefit of adjustment of income or gain on account of mark to market losses or gain will be given as per the CBDT instruction No.3/2010 - HELD THAT:- As per decision of CIT v. D. Chetan Co. [ 2016 (10) TMI 629 - BOMBAY HIGH COURT] , where it was held that Forward contracts for purpose of hedging in course of normal business activities of import and export done to cover up losses on account of differences in foreign exchange valuations would not be speculative activity, but business activity. Tribunal in the case of Foods and Inns Ltd. [ 2016 (6) TMI 333 - ITAT MUMBAI] where it was held that where assessee engaged in manufacture and export of processed food products, in order to safeguard itself against fluctuations in exchange rates of foreign currency, entered into foreign exchange forward contracts with banks against confirmed export order, hedging loss suffered by assessee in respect of said forward contracts was to be allowed as business loss - we find ourselves in agreement with the contention that the issue is duly covered in favour of the assessee. 2021 (6) TMI 201 Rectification application u/s 254 - Interest income earned from joint bank account - undisclosed foreign a/c of the assessee - assessee submitted that the CIT (A) has granted relief to the assessee on the ground that the assessee is only a housewife and did not have any independent source of income and that the estimated interest income from HSBC A/c needs to be considered in the hands of the assessee s husband and as he had admitted that the a/c was opened by his employer to credit his salary income - HELD THAT:- Having regard to the rival contentions and the material on record, we find that the Assessing Officer has made the addition in the hands of the assessee of interest income from an A/c with HSBC held by the assessee jointly with her husband which was opened by his employer to deposit his salary income. Therefore, it is not an undisclosed foreign a/c of the assessee and therefore, the exception (d) to the circular will not apply. Therefore, this M.A is dismissed. 2021 (6) TMI 199 Unexplained share application and Share Premium - Addition u/s 68 - Onus to prove the identity, creditworthiness and genuineness - CIT- A deleted the addition - HELD THAT:- As in this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee, cannot be brushed aside by the AO to draw adverse view, cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. We are inclined to uphold the order of the Ld. Commissioner of Income Tax (Appeals). Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature and source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, we confirm the order of ld CIT(A) in deleting the addition - Decided against revenue. 2021 (6) TMI 197 Addition on noting made in scribbling pad found and seized - HELD THAT:- In the instant case, the AO has completely brushed aside the explanation of the assessee on the contents of the diary. AO has not taken into account, the contents of the scribbling pad and the explanation of the assessee together while making the assessment. AO has not even considered the gross amounts mentioned in the diary. He has enhanced the gross receipts with designing charges / commission which was deducted at source. AO ought to have considered the entire material available in the diary in toto together with the explanation offered by the assessee. If the AO had considered entire material i.e., diary along with the explanation offered by the assessee, there is no case for making the addition in the instant case. Thus, the case laws above are squarely applicable to the assessee s case. AO in the assessment order for the A.Y. 2016-17 given a finding that noting is nothing but unaccounted profit earned from various businesses run by B.Venkateswarlu and his two sons and observed that out of this unaccounted profit, they were using the unaccounted profit for money lending business, personal drawings and unaccounted reserve. From reading of the assessment order, it is clear that the AO himself has accepted that the notings mentioned in the diary does not pertain to the assessee company, hence, the AO did not make out a case that the notings made in the diary was related to the assessee company. Thus the addition made by the AO in the hands of the company is unsustainable, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. 2021 (6) TMI 189 Addition made towards interest expenses claimed - case was selected for scrutiny under CASS - purchase of its business assets (land building, Plant and Equipment and Furniture Fixtures) - CIT(A) observed that the assessee derived income from letting out the properties i.e. rental income, which has been shown as income from operations in the P L Account and since the assessee has recognized revenue from operation and the same has been offered to tax, the AO is not justified in making the said disallowance - HELD THAT:- Assets have been leased by the assessee and income in the form of rental and maintenance charges have been credited to Profit and Loss and accordingly offered to tax. As the interest expenses incurred on the borrowing which are utilized for acquiring the assets, income derived from which is credited to P L account and offered to tax. There is a direct nexus between the income offered and the expenditure claimed. CIT(A) considering the facts of the case of the assessee, directed the AO to delete the disallowance made towards interest paid. We do not find any reason to interfere with the order of the CIT(A) and upholding the same, we dismiss the ground raised by the revenue on this count. Appeal of the revenue is dismissed. Corporate Laws 2021 (6) TMI 209 Rectification of register of Members/Beneficiary - transmission of shares - Section 59(4) of the Companies Act, 2013 - HELD THAT:- Since the Petitioner is neither a depository, company, depository participant, holder of the securities or the Securities and Exchange Board as specified in Section 59(4) of the Companies Act, 2013 stated to be the persons eligible to approach this Tribunal seeking for a direction from this Tribunal to any Company or a Depository to set right the contravention in rectifying its register or records concerned, the Petition stood posted before this Tribunal for maintainability. From the typed set filed along with the Application, only a certificate of Registration issued by SEBI to the Petitioner to act as Registrars to an issue and share transfer agent dated 13.01.2012 is produced. However, no certificate has been placed on record by the Petitioner to establish that it falls under any of the categories as specified in Section 59(4) of Companies Act, 2013 particularly as a Depository Participant. It is required to be noted that if the Petitioner is aggrieved by the order passed by SEBI based on a complaint filed by the 2nd Respondent, the appropriate course to be adopted by the Petitioner is to approach the appropriate Appellate Authorities itself as provided in the Act under which the order was passed and this Tribunal cannot redress the grievance in relation to the order or in terms of the said order. Further from a perusal of the order passed by SEBI, it is evident that the Petitioner had failed to carry out minimum due diligence exercise taking into consideration the glaring inconsistencies in the 'Certificates' purported to be issued by Police Station regarding filing of complaint with respect to loss of share certificate, submitted by the claimants from which the same could have been identified. This Tribunal is of the considered view that if at all any person who can be considered as 'aggrieved' by the acts of the 1st Respondent or the Petitioner whether individually or in tandem it can be only the 2nd Respondent subject to him establishing his clear title to the shares entitling him to seek for rectification under Section 59 of the Companies Act, 2013 - Petitioner not being covered under Section 59(1) or Section 59(4) of the Companies Act, 2013 as to a person who is eligible to approach this Tribunal seeking for rectification as sought for in the Petition. Petition is directed to be returned by the Registry to the Petitioner as not maintainable. 2021 (6) TMI 198 Winding up of liquidation process - sanction by Central Government to file the instant Petition - fraudulent and unlawful purpose - HELD THAT:- It is a settled position of law that misdeeds and illegal acts committed by such Officials of Antrix would not bind the State and those actions have become-initio void and would not result in any legal/civil consequences. It is an absurd contention rose on behalf of Devas, that after obtaining the contract in question in the above manner, it started to obtain necessary licenses to fulfil its obligations under the terms of Contract. Devas did not stop its fraudulent activities even after termination of the Contract in question. By taking advantage, rather misusing the terms of Article 20 (Arbitration Clause) as contained in the Agreement, to pre-empt Antrix to settle the dispute first by referring to senior Management of both the parties, failing which to invoke arbitration clause, has hurriedly rushed to ICC Court on 01st July, 2011 by-passing due procedure as contemplated under the Agreement. Even the idea to incorporate Devas was with fraudulent intentions coupled with malafide objects to enter into Agreement with Antrix with no responsibility at all. It is unknown to law that such a prestigious agreement with Govt. Owned Company was got signed by a clerk, paying remuneration for the same. Therefore, the Agreement in question would become void ab initio and it would not create any legal rights, much civil rights to Devas. Thus the incorporation of Devas made with fraudulent intentions is ab initio void and its name should be struck from the Register of Registrar of Companies by virtue of this winding up proceedings. Though the validity of Agreement in question is not the subject matter in the instant case, the fraudulent and unlawful purpose behind incorporation of Devas, would be relevant factors to be taken into consideration by the Tribunal, while deciding the case - thus, the circumstances as mentioned under provisions of Section 271 of Companies Act, 2013 stand fulfilled so as to order Winding Up of R-1 Devas Company. The Petitioner has established its case beyond doubt that the incorporation of DEVAS/R-1 Company was made in a fraudulent manner and for unlawful purposes. Its management is continuing to resort to fraudulent activities - Petition allowed. 2021 (6) TMI 196 Levy of fine / penalty - Failure to file the copies of the Annual Returns with the Registrar of Companies, Maharashtra, Mumbai within prescribed time - bona fide delay without any mala fide intention - Financial Years 2003-2004, 2004-2005, 2005-2006, 2006-2007 - violation of section 92 of the Companies Act, 2013 - HELD THAT:- This Bench is of the view that the present CP No. 2393 of 2018 deserves to be allowed, because the alleged violation/contravention of the proviso of the Companies Act, 2013 has already been complied with and the default has been made good by the Company although filed belatedly its Annual Returns for the Financial Years 2003-2004, 2004-2005, 2005-2006 and 2006-2007 - The present Application can be allowed subject to payment of compounding fee and penalty as per the prescribed section 92(5) where the Company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default . The applicant Company is directed to pay ₹ 50,000/- per day from the date of Default and the Directors herein shall be liable to pay fine of Rs. Fifty Thousand/- each by the 2 Directors herein i.e. in total ₹ 1,50,000/- shall be sufficient as a deterrent for not repeating the impugned default in future. The imposed remittance shall be paid by way of Demand Draft drawn in favour of Registrar of Companies or any mode of payment as suggested by the office of RoC like deposit in Cash or Challan in Bharat Kosh within 30 days from the receipt of an authentic copy of this Order and copy of this Order may be communicated to the office of RoC for information and further needful action. Application disposed off. 2021 (6) TMI 195 Withdrawal of CIRP application admitted under section 7 of IC, 2016 - HELD THAT:- As per section 12A of the Code, the Adjudicating Authority may allow the withdrawal of application admitted under sections 7, 9 or 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors - It is seen from the record that the CoC has by 100% votes approved the withdrawal of the underlying Company Petition. Further, the Applicant has submitted that the entire settlement amount has already been paid. It is also submitted that the CIRP cost has also been paid. There are no impediment in allowing the present application - application allowed. 2021 (6) TMI 191 Oppression and mismanagement - implementation of the circular resolution dated November 3, 2020 - Power of the tribunal in issuing direction to consider creating an interim committee to run the day-to-day affairs of the first respondent/company - HELD THAT:- This Tribunal without delving deep, at this juncture, is of the prima facie view that the implementation of the circular resolution dated November 3, 2020 is to be stayed in respect of the first respondent/company, in furtherance of substantial cause of justice and accordingly, stays the implementation of circular resolution dated November 3, 2020 till the next date of hearing June 11, 2021 - it is open to learned counsel for respondent No. 7 and learned counsel for respondents Nos. 3, 4, 5, and 11 to file a detailed reply/response/counter to the main appeal (not only through e-filing and also through hard copy before the office of the registry ) and the copy of the same shall be served to the appellants side before June 7, 2021. Soon after the receipt of the reply/response/counter of the respective parties, it is open to the appellants to file rejoinder if any, (not only through e-filing and also through hard copy before the office of the registry ), of course, after serving to learned counsel for respondent No. 7 and respondents Nos. 3, 4, 5 and 11 - Let notice be issued through speed post returnable by June 11, 2021. Let the requisite together with process fee be filed by the appellants within 3 days from today. Notice to respondents Nos. 1, 2, 6, 8, 9 and 10 is also directed to be issued to the e-mail address of the said respondents, in the event of appellants furnishing the same. The office of the registry is directed to list the matter on June 11, 2021. 2021 (6) TMI 187 Restoration of name of the Company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The reasons shown by the Applicant for restoration of the name of the Company in the register of companies maintained by the Respondent. Admittedly, the relevant documents which are to be filed, are ready with the Company and the Company is willing to file the same, if so permitted - The Company has not deposited heavy cash in its Bank Account during the period of demonetization. Copy of Bank statement along with demonetization affidavit is enclosed to the Application. We are satisfied with the reasons shown by the Applicant for restoration of the name of the Company in the register of companies maintained by the Respondent. The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions - Application allowed. Insolvency & Bankruptcy 2021 (6) TMI 219 Interim direction to allow the petitioner to operate its bank account - siphoning off of funds while CIRP proceedings are ongoing - unfreezing of attached Bank Accounts - HELD THAT:- It is apparent that there was business relation between the petitioner-company and the NPIL, which is evident from the various documents annexed to the petition. Only question raised in this FIR is that the money was transferred by the suspended CMD without any authority, inasmuch as, the entire state of affairs of NPIL was vested with respondent No. 2, who has been appointed as the resolution professional. Only incriminating allegation against the petitioner is that the suspended CMD has personal interest in the petitioner-company being an associate company, which is however, a disputed fact required to be investigated by the police. Freezing of all the bank account as indicated would certainly cause unnecessary hardship, which may not be necessary for the investigation of the present FIR in view of the nature of accusation made therein as well as in view of the offer made by the petitioner to furnish a bond - the petitioner is entitled to the interim relief as sought for. Application disposed off. 2021 (6) TMI 210 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- As per Form I part IV the applicant submits that the default has first occurred on 01.11.2015, Secondly on 14.07.2018, when the corporate debtor failed to comply with the order dated 29.06.2019 passed by UPRERA, Lucknow and is still continuing till date. The present application is filed on 13.11.2019. Hence, the application is within in the period and is not barred by limitation - It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. This Tribunal is satisfied that a default has occurred and the application under Section 7 is complete. The debt, which had crystalized with respect to the refund of the allotment money as ordered by the UP-RERA, Lucknow, and again confirmed by the Hon ble Allahabad High Court,which remained unpaid leading to default of payment of the financial debt. Admittedly, the applicant is a decree holder, of a decree passed of UP-RERA Lucknow.In the present case the application under Section 7 is not filed only on the basis of the decree but the applicant has acted one step forward and executed the decree before UP-RERA Lucknow wherein execution order has been passed confirming the payment of debt due to the applicant - the present applicant though original decree holder, has not filed this application under Section 7 of the code, for execution of decree but to demand the financial debt due and failing which the insolvency resolution of the corporate debtor. Application admitted - moratorium declared. 2021 (6) TMI 208 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - suit for recovery of money remains suspended for the period during the pendency of inquiry under Section 16, 17 or appeal under Section 25 of SICA - existence of debt and dispute or not - Applicability of principles of Res ipsa loquitur - HELD THAT:- It can be seen that the account of the Corporate Debtor was declared as NPA on 31.03.1999. The Corporate Debtor vide their letter dated 18.08.2000 have stated that the Company has become sick and referred the matter to the Board for Industrial Financial Reconstruction (BIFR) as per Section 15(1) of SICA and the proceedings before the BIFR commenced on 09.05.2001 - the remedy for the enforcement of right by the Creditor to recover the outstanding debt from the Debtor through the medium of a suit for recovery of money remains suspended for the period during the pendency of inquiry under Section 16, 17 or appeal under Section 25 of SICA. As to the present case, the Corporate Debtor was declared as a Sick Industrial Unit by BIFR vide order dated 09.05.2001. Sick Industrial Companies (Special Provisions) Act, 1985 came to be repealed by the inception of the Insolvency and Bankruptcy Code, 2016 which was enforced with effect from 01.12.2016. Thus, it is crystal clear that on account of statutory bar, the period commencing from 09.05.2001 to 01.12.2016 stood excluded under the aforesaid provisions rendering the Financial Creditor ineligible to file for recovery of outstanding debt. Therefore, for purposes of calculating limitation, such period is required to be excluded in terms of Section 22(5) of SICA. The Corporate Debtor, by way of their letter dated 14.03.2017 has acknowledged that they have overdue Term Loan of ₹ 772 Lakh from the Financial Creditor and requested for the OTS proposal of ₹ 450 Lakh. This letter in terms of Section 18 of the Limitation Act, 1963 extends the period of limitation. Thus, the present Application which is filed before this Tribunal on 05.07.2019, by taking into consideration the reasonings, is not barred by limitation. Whether there is any debt and default being committed by the Corporate Debtor? - HELD THAT:- The letter dated 14.03.2017 written by the Corporate Debtor would operate on the maxim Res ipsa loquitur which means the thing which speaks for itself. Further, the letter dated 09.08.2018 wherein the Corporate Debtor has increased their OTS from ₹ 450 Lakh to ₹ 550 Lakh, which also came to be rejected by the Financial Creditor by their letter dated 06.02.2019. The sequence of all these OTS letters written by the Corporate Debtor shows that there exists a 'debt' and 'default' on the part of the Corporate Debtor - Also the default arising in the present Application is much prior to the advent of the Covid-19 pandemic hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. Application admitted - moratorium declared. 2021 (6) TMI 207 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is seen that the breakage of glass as per the report given by the glass manufacturers cannot be construed as a deficiency in service on the part of the Operational Creditor and thereby giving rise to a 'dispute' which is existing between the parties. In fact after the issue of the breakage of glass, the Corporate Debtor has issued a cheque to the Operational Creditor on 23.11.2017 and on presentation, the same was returned with an endorsement funds insufficient - Further it is seen from the records of the proceedings dated 22.02.2021, 22.03.2021 and 16.04.2021 the Corporate Debtor has sought time under the garb of settlement as the Respondent/Corporate Debtor was taking every effort to settle the matter between the parties amicably and sought for adjournments on the said pretext. Finally when the matter came up for hearing on 16.04.2021, the Corporate Debtor again sought for an adjournment on the pretext that a draft memo in relation to the settlement is yet to be finalized. However, this Tribunal was not inclined to grant any further adjournment and reserved the matter for orders. The Operational Creditor has proved the debt is due and payable by the Corporate Debtor and that the Corporate Debtor has committed default in payment of the said operational debt to the Operational Creditor. Further, the defence as set out by the Corporate Debtor also does not hold any merit in view of the report submitted by the Glass manufacturer stating that the breakage of glass was not due to the manufacturing defect but it is an inherent risk or problem associated with use of tempered glass. Application admitted - moratorium declared. 2021 (6) TMI 206 Seeking exclusion of time from liquidation period - exclusion of Covid - 19 lockdown period - HELD THAT:- Based upon the Notification issued by the Ministry of Home Affairs, Government of India dated 24.03.2020, 15.04.2020, 01.05.2020, 17.05.2020, 30.05.2020, 29.06.2020 and 29.07.2020 and the Notifications issued by the Tamil Nadu State Government in relation to lockdown being extended in the State of Tamil Nadu dated 31.07.2020, 31.08.2020, 30.09.2020, 31.10.2020 and 30.11.2020, this Authority feels that it is just and proper that the period from 24.03.2020 to 14.03.2021 is required to be excluded from the Liquidation period timelines and consequently the Liquidation period is required to be extended for a further period of 6 months and as such, after exclusion of the period from 24.03.2020 to 14.03.2021, the Liquidation period of the Corporate Debtor is extended for a period of 6 months from 04.09.2020 and the Liquidation process in relation to the Corporate Debtor is required to be completed on or before 24.02.2022. The Liquidator, in view of the extension granted, is directed to abide by the model timelines for the completion of the tasks remaining incomplete, as prescribed by IBBI in Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and thereby complete the process in all earnest and in accordance with the said Regulations including filing of reports as required, with this Tribunal. Application allowed. 2021 (6) TMI 205 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The issue which is required to be decided delves around the fact as to the Memorandum of Understanding dated 22.08.2019, wherein the parties have arrived at a consensus, in and by which the Corporate Debtor is required to pay a sum of ₹ 1.30 Crore and thereby the Corporate Debtor having paid a sum of ₹ 50 Lakh whether can now, at this point of time raise a dispute as to the remaining sum of ₹ 80 Lakh. In the present case, the Demand Notice was sent to the Corporate Debtor on 24.10.2019 and the same was received by the Corporate Debtor on 26.10.2019 and in their reply letter dated 18.11.2019, the Corporate Debtor has not brought to the notice of the Operational Creditor as to any dispute between the parties which has been raised, before the issuance of the Demand Notice. Only after the issuance of the Demand Notice on 24.10.2019, the Corporate Debtor for the first time has sought to refute the dues which is payable to the Operational Creditor - from the documents placed in support of the claim being made in Part IV of the Application, it is seen that the Corporate Debtor is liable to pay the said sum of ₹ 80 Lakh to the Operational Creditor as per the Memorandum of Understanding dated 22.08.2019 and has committed a default in payment of the same. The Operational Creditor has proved the existence of an 'Operational debt' and the Corporate Debtor has committed 'default' in the repayment of the said 'Operational debt' to the Operational Creditor and in the said circumstances we are constrained to initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor - Application admitted - moratorium declared. 2021 (6) TMI 200 Liquidation of the Corporate Debtor - no Resolution Plan approved by the CoC and the CoC by 96.70% voting share approved liquidation of the Corporate Debtor - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the Resolution Professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor. In the present case, the CoC has resolved by 96.70% voting share to liquidate the Corporate Debtor. In the present case, the RP wanted to continue as the liquidator. RP has given his consent which is annexed to the application at Annexure G. Section 34 of the Code does not envisage any role for the CoC in appointment of the Liquidator - This is a case where two Resolution Plans were received but neither of them approved by the CoC and the period of CIRP has expired on 13.02.2021. Application allowed. 2021 (6) TMI 194 Reduction of share capital - arrears of repayment of deposits or any interest thereon is there or not - section 66 of Companies Act, 2013 - HELD THAT:- Since there is neither Secured Creditor nor Unsecured Creditor of the Applicant Company. However, the Applicant Company is directed to make publication on or before 20.05.2021 in the newspapers one in English i.e. Business Standard (All India edition) and one in Vernacular i.e. Malai Malar (Tamilnadu edition) having wide circulation specifically containing the proposed reduction of share capital of the Company. A notice copy shall also be uploaded on the website of the Company indicating the details containing the proposed reduction of share capital of the Company. The Applicant Company is directed to file the proof of newspaper publication by way of an affidavit. The Registry is directed to place the matter before this Bench within 15 days after expiry of the 90 days period of notice. 2021 (6) TMI 193 Seeking an order excluding a period of 221 days in computing the Liquidation period - section 60(5) of the IBC, 2016 read with Regulation 44 of the IBBI (Liquidation Process) Regulations 2016 read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- Upon perusing the documents, this Adjudicating Authority is of the view that as per Regulation 47AA IBBI (Liquidation Process) Regulations, 2016, the period from 24.03.2020 to 31.10.2020 are excluded from the time frame of Liquidation period. Application allowed. 2021 (6) TMI 192 Liquidation order - recovery of unauthorized transactions effected by the bank after June 14, 2017 - undervalued transactions - HELD THAT:- It is required to be noted that upon an application originally filed by the corporate debtor under section 10 of the IBC, 2016 seeking thereof to initiate the CIRP against itself the same came to be admitted by this Tribunal on June 14, 2017. As per the provisions of the IBC, 2016 once an application under section 7, 9 or 10 of the IBC, 2016 is admitted by the Adjudicating Authority, the moratorium as envisaged under section 14 of the IBC, 2016 irrespective of who had initiated the process will come into effect - it is clear from a combined reading of the provisions of sections 17 and 18 of the IBC, 2016 that once the interim resolution professional in relation to the corporate debtor is appointed by this Tribunal the management of the affairs of the corporate debtor shall vest with the IRP and further the powers of the board of directors or the partners of the corporate debtor shall stand suspended and will be exercised by the IRP. From the documents filed by the third respondent/Bank of India, it is seen that the said amount of ₹ 79,65,070 was being distributed to about 69 persons for the period from June 30, 2017 to September 28, 2017 at the behest of the first and second respondent herein by way of various bank instruments, viz., cheques/NEFT/RTGS and cash withdrawals. At this juncture, it is to be borne in mind that the avoidance transactions as contem plated under Chapter III of the IBC, 2016 would come into place only in relation to the transactions which happened prior to the commencement of CIRP. However, section 66 of the IBC, which deals with fraudulent trading and wrongful trading which falls under Chapter VI does not make such a distinction - the first and second respondents have also acted in violation of the moratorium as envisaged under section 14 of the IBC, 2016. The first and second respondent have knowingly transferred the sum of ₹ 79,65,090 to the accounts of the creditors, which would amount to fraudulent trading as envisaged under section 66(1) of the IBC, 2016 aided and abetted by the third respondent which they are required to duly account for the corporate debtor, presently under liquidation and hence as such they are liable to make such contribution to the assets of the corporate debtor - first to third respondents are directed to pay to the liquidation estate managed by the applicant, a sum of ₹ 79,65,090 along with interest chargeable at bank rates from the respective date of withdrawals, within a period of 60 days from the date of this order. In relation to the fourth respondent, the IBBI is directed to take suitable action - application disposed off. 2021 (6) TMI 190 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - non-performing assets - existence of debt and dispute or not - HELD THAT:- The corporate debtor has committed default in repayment of its dues which it had availed of by the financial creditor by way of various credit facilities sanctioned and granted by it. The record from the information utility also posits the same fact as the same shows as deemed to be authenticated . Further, it may be seen that the financial creditor has classified the accounts of the corporate debtor as NPA on March 31, 2018 and thus under the provisions of the IBC, taking into consideration the decision of the Supreme Court in GAURAV HARGOVINDBHAI DAVE VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LTD. AND ANR. [ 2019 (9) TMI 1019 - SUPREME COURT] and B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] , the right to sue accrues for the financial creditor to sue the corporate debtor on March 31, 2018 the date on which the account of the corporate debtor was declared as NPA and from the records it is evident that the financial creditor has filed the present petition on July 24, 2020 which is well within the 3 years period of limitation. Thus, there is a debt and default on the part of the corporate debtor and the corporate debtor is unable to repay its dues to the consortium of bankers and in the instant case to the financial creditor - Also the default arising in the present application is much prior to the advent of the Covid-19 pandemic and hence the corporate debtor cannot seek shelter also under section 10A of the IBC, 2016. The application as filed by the applicant-financial creditor is required to be admitted under section 7(5) of the I and B Code, 2016 - application admitted - moratorium declared. 2021 (6) TMI 188 Approval of Resolution Plan - section 30(6) of the IB Code, 2016, R/w regulation 39(4) of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016 - HELD THAT:- Section 30(6) of the Code enjoins the resolution professional to submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. Section 31 of the Code deals with the approval of the resolution plan by the Adjudicating Authority, if It is satisfied that the resolution plan as approved by the committee of creditors under section 39(4) meets the requirements as referred to in section 30(2) - before approving the Resolution plan, it is the duty of the Adjudicating Authority that it should satisfy itself that the Resolution plan as approved by the COC meets the requirements as referred to in sub-section (2) of Section 30. In terms of Regulation 27 of CIRP Regulations, Liquidation value was ascertained through two registered valuers, and the Resolution Plan offers more than the average liquidation value - The RP has complied with the code in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1)(a), 38(2)(a), 38(2)(b), 38(2)(e) 38(3) of CIRP regulations. The 'Resolution Plan' filed with the Application meets the requirements of Section 30(2) of the I B Code, 2016 and Regulations 37, 38, 38(1 A) and 39(4) of TBBI (CMP) Regulations, 2016. The 'Resolution Plan is also not in contravention of any of the provisions of Section 29A Hence, this Adjudicating Authority is satisfied that the Resolution Plan is in accordance with Law - the resolution plan is approved - moratorium shall cease to have effect. 2021 (6) TMI 186 Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - Financial Creditors - HELD THAT:- It is a fact that the Business Loan Agreement (BLA) was entered into between the parties i.e., Zydus Healthcare Limited/Financial Creditor with Genesys Biologies Private Limited/Corporate Debtor on 28.09.2018 whereby the Financial Creditor advanced a loan of ₹ 10.00 crores to the Corporate Debtor on the basis of the terms conditions of the BLA. Further, a Deed of Corporate Guarantee was executed in favour of the Financial Creditor by Amicus Formulation (India) Pvt. Ltd./Corporate Guarantor and a separate Deed of Personal Guarantee was also signed by five persons, who are also directors of the Corporate Debtor, namely - 1. Mr. Rajendra Rao Juwadi; 2. Mr. Vamshider Rao Joganpally; 3. Mr. Venkat Reddy Yelma, 4. Mr. Venkata Krishna Rao Dasari; and 5. Mr. Tulsi Ramu Chatadi. It is also a fact that the Corporate Debtor has committed default of repayment of loan amount on 30.09.2019. The Financial Creditor was assured during the month of October and November, 2019 by the Corporate Debtor for repayment of the outstanding along with interest - the Corporate Debtor did not make any repayment of principal and interest amount towards the discharge of financial debt of ₹ 12,41,50,950.96 claimed by the Financial Creditor till the date of the application. Hence, this application was filed. There is a Business Loan Agreement entered into between both the parties and whereby the Financial Creditor advanced a loan of ₹ 10 crores on the basis of the terms and conditions of BLA. The BLA was amended several times in view of the governing circumstances and finally by way of final amendment dated 01.06.2019, the date of repayment of the loan amount was extended upto 30.09.2019 by mutually agreed terms by both the parties. However, the Corporate Debtor committed default in repayment of loan amount on 30.09.2019 under the provisions of Clause 7 of BLA - the contention raised by the Corporate Debtor regarding the insufficient stamp duty and raising a contention that this is an investment not as a loan is not tenable in the light of the BLA entered into between both the parties as regards the amount given to the Corporate Debtor. There is a financial debt which was given by the Financial Creditor and the Corporate Debtor has defaulted in making repayment as per the BLA amended several times in this regard - Application admitted - moratorium declared. PMLA 2021 (6) TMI 217 Validity of second Bail application - seeking grant of regular bail - scheduled offences - preparation of forged documents and records by In-charge Executive Engineer, Water Resources Division Bilaspur - HELD THAT:- The Supreme Court in the matter of ROHIT TANDON VERSUS THE ENFORCEMENT DIRECTORATE [ 2017 (11) TMI 779 - SUPREME COURT] has held that economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. The first bail application of the applicant was rejected by this Court on 03.01.2020 taking into consideration the gravity of offence and the nature of allegation against the applicant. After dismissal of first bail application, there are no change in circumstances - the second application filed under Section 439 of the Code of Criminal Procedure is rejected. Service Tax 2021 (6) TMI 226 Levy of service tax - food that is taken away or collected from restaurants or eateries, in parcels - consumption of the food and drink is not in the premises of the restaurant - HELD THAT:- Not all services rendered by restaurants in the sale of food and drink are taxable and it is only certain specified situations that attract tax. The sale of food and drink simplicitor, services of selection and purchase of ingredients, preparation of ingredients for cooking and the actual preparation of the food and drink would not attract the levy of tax. Only those services commencing from the point where the food and drinks are collected for service at the table till the raising of the bill, are covered. This would encompass a gamut of services including arrangements for seating, d cor, music and dance, both live and otherwise, the services of Ma tre D Or, hostesses, liveried waiters and the use of fine crockery and cutlery, among others. The provision of the aforesaid niceties are critical to the determination as to whether the establishment in question would attract liability to service tax, and that too, only in an air-conditioned restaurant - In the case of take-away or food parcels, the aforesaid attributes are conspicuous by their absence. In most restaurants, there is a separate counter for collection of the take-away food parcels. Once processed and readied for delivery, the parcels are brought to a separate counter and are picked up either by the customer or a delivery service. More often than not, the take-away counters are positioned away from the main dining area that may or may not be air-conditioned. In any event, the consumption of the food and drink is not in the premises of the restaurant - the provision of food and drink to be taken-away in parcels by restaurants tantamount to the sale of food and drink and does not attract service tax under the Act. Petition allowed - decided in favor of petitioner. CST, VAT & Sales Tax 2021 (6) TMI 223 Concessional rate of duty - issuance of 'C' Forms - inclusion of 'High Speed Diesel Oil' as a commodity in the registration certificate - HELD THAT:- The petitioner is entitled to the inclusion of 'High Speed Diesel Oil' as a commodity in the registration certificate. Let this exercise be carried out within a period of four (4) weeks from the date of uploading of this order. The request of the petitioner for issuance of 'C' Forms is allowed as a consequence thereof. Petition allowed. Wealth tax 2021 (6) TMI 215 Wealth tax assessment - omission on the part of the assessee to hide or conceal the wealth was intended to avoid payment tax - penalty imposed under section 18(1)(c) of the Act - HELD THAT:- If the penalty order is perused in the light of the judgment of Hon ble jurisdictional High Court [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] , then it will reveal that the ld.AO was not specific in his finding for which he has visited the assessee with penalty. We also find support from the order of case HPCL MITTAL ENERGY LTD. [ 2018 (6) TMI 1554 - ITAT AMRITSAR] wherein the ld.Third Member held that where the satisfaction of the AO while initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for concealment/furnishing inaccurate particulars of income , the levy of penalty is not sustainable. It is pertinent here to note that section 271(1)(c) of the Income Tax Act, 1961 and section 18(1)(c) of the Wealth Tax Act, 1957 are pari materia to each other in terms of purpose and object, and therefore, proposition of law laid down by various higher judicial forums would be applicable on the same analogous in the cases of proceedings under section 18(1)(c) of the Act as well. Therefore, the impugned order is not in line of law laid down by the Hon ble jurisdictional High Court, and hence not sustainable. The ld.CIT(A) has erred in upholding this order of the AO. We allow this appeal of the assessee and quash the penalty order- Appeal of the assessee is allowed. Indian Laws 2021 (6) TMI 222 Dishonor of Cheque - payment of compensation or fine - proceedings contained in chapter XVII of the Negotiable Instruments Act - Quasi criminal proceedings or not - HELD THAT:- The proceedings under Chapter XVII of the Negotiable Instrument Act are quasi criminal in nature and that the gravamen of the proceedings though makes the act complained of as an offence, the object of the Act is really in order to get back through a summary proceedings, the amount contained in the dishonoured cheque together with interest and cost expeditiously and cheaply. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, the sentence of imprisonment can be modified inlieu of compensation paid which is twice the amount of the cheque. In this case, the petitioner/accused has now come up with a proposal to pay twice the cheque amount ₹ 7,41,000/- as compensation and also ₹ 9,000/- towards cost in lieu of the sentence of imprisonment of one year. This Court is satisfied that the respondent / complainant is duly compensated and this Court is of the opinion that the proceedings can be closed. The Criminal Revision case stands partly allowed. In lieu of the petitioner/accused paying twice the cheque amount as compensation, the conviction and sentence of imprisonment for one year stands set aside. It is made clear that the petitioner shall not suffer any stigma of disqualification of his service by the payment of compensation. 2021 (6) TMI 221 Dishonor of Cheque - rebuttal of presumption - defence of the accused is that the impugned pronote and cheque were given to the complainant only towards security for loan advanced by one of his friends, which has been misused by the complainant - HELD THAT:- The complainant has proved his case by letting in cogent evidence. Whereas, the accused has failed to rebut the presumption u/s.139 of N.I.Act to prove his case. In this case, though the accused had accepted the signature in the disputed cheque and the pronote, it is the case of the accused in defence that no consideration has been passed based on the Ex.P1 Ex.P2 and that the complainant had not proved the passing of consideration by adducing sufficient evidence and that the complainant had also not proved that he had sufficient sources of income to lend the loan amount of ₹ 2,00,000/- as alleged in the complaint and that the attester of the pronote has not been examined. The statutory presumptions u/s.118 and 139 of N.I.Act make it clear that the burden is not on the complainant to prove his case, whereas, the burden is on the accused to prove his case. In this case, as stated above that the complainant has proved his case by letting in sufficient evidence, however, the accused having admitted the signatures in the pronote and the cheque has not let in any evidence in rebuttal. The Appellate Court while confirming the conviction, modified the sentence to six months instead of one year as imposed by the trial Court and as far as awarding of compensation is concerned, the same was confirmed. This Court finds no infirmity or illegality in the judgments passed by the Courts below - Revision dismissed. 2021 (6) TMI 220 Dishonor of Cheque - standard of proof for rebuttal presumption - Acquittal of the accussed - preponderance of the probability - HELD THAT:- Admittedly, neither any oral nor any documentary evidences had been adduced by the complainant to prove that such a huge amount of ₹ 6 lakhs was paid to the accused. Though, the complainant had later stated that the amounts were arranged through his friends, none of his friends were examined to prove the same. Further, it is also highly doubtful that such a huge amount could have been lent to the accused on the strength a post dated cheque. The accused had probabilised his defence by preponderance of probability by letting evidence to prove that the complainant was not having financial capacity to pay/lend such a huge amount of ₹ 6 lakhs and that the cheque was not drawn for consideration and it was not issued for the discharge, in whole or in part, of any debt or liability. The accused has discharged the burden under Section 118(a) and 139 of the Negotiable Instrument Act satisfactorily by probablising valid defence and when the burden having been discharged, the evidential burden had shifted and moved on to the complainant which, he had failed to prove and therefore, the presumption under Section 118(a) and 139 of the Negotiable Instrument Act will not come again to the aid or rescue of the complainant - The Courts below have failed to appreciate the evidences on record with proper perspectives and have erred in convicting the petitioner/accused on perverse finding. Necessarily, the petitioner/accused has to be acquitted. The Criminal Revision case is Allowed. 2021 (6) TMI 218 Bribe - demand or solicitation of money from the complainant or not - Assistant commissioner, Sales Tax - During the course of hearing of the appeal on 28.02.1996, the appellant allegedly demanded ₹ 4000/- as bribe for deciding the said appeal in his favour. - HELD THAT:- It is proved beyond shadow of doubt that Shri Ravi Bhatt/PW 9 was never inside the room of the appellant while PW 5 was present in the room of the appellant. Therefore, the statement of PW 9 on the issue of his presence in the room of the accused on 01.03.1996 during trap is totally false, not corroborated in material particulars from independent source. It is proved that PW 9/approver was never present in the room of the appellant during the talk of PW 5 with the appellant. Since PW 9 was not present in the room of the appellant, there is no question of direction from him to accept bribe from complainant. Moreover, the PW 9 cannot be an accomplice nor co-conspirator. All his deposition statement is neither relevant nor admissible u/s 10 of the Evidence Act. In fact, the same is barred u/s 60 of the Evidence Act as it is only hearsay. Therefore, the testimony of the approver is liable to be rejected only on this ground - the Ld. Special Judge committed error of law getting corroboration for the deposition of PW 9/Approval for his earlier statement under Section 164 Cr.P.C., which is prohibited under law. The approver stands as a special guilty witness and hence, Sections 145/157 of Evidence Act is not applicable. In the instant case PW 5 is bribe giver and he is an abettor for the offence of PW 9 for acceptance of bribe. The appellant could not give a direction to PW 5 to give money to somebody else. PW 9 could not be the agent/accomplice of the appellant since he is also a government servant - Since the appellant did not demand any money from PW 5, there was no question of having an accomplice to receive money, as the complainant met the appellant and got the opportunity to give money when he was alone in his chamber, and talk to complainant. The prosecution has failed to prove its case against the appellant beyond a reasonable doubt. Moreover, learned Trial Court has overlooked the material on record in favour of the appellant - Appeal disposed off.
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