TMI Tax Updates - e-Newsletter
September 30, 2020
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Scope of Advance Ruling - GTA Services or not (SAC 996791) - sub-contractor - hiring out their transport vehicles - whether the order of AAR has imposed restrictions on them in doing business as the order passed by the Advance Ruling Authority does not permit them to charge 12% GST on the forward charge basis - The Advance Ruling order does not debar the Appellant from acting as GTA in other transactions, where they enter into transport contract with the consignor or consignee directly. - AAAR
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GST:
Classification of services - GTA Services or not (SAC 996791) - sub-contractor - The Appellant is simply hiring out their transport vehicles to M/s. Posco ISDC Pvt. Ltd. for a consideration, hence, their services would be classified under the Heading 9966 bearing the description “rental services of transport vehicles”. - AAAR
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Income Tax:
Adjustment arising out of performance guarantee - The transaction is in the form of indemnity provided by the assessee - the contract which was awarded to its AE would get assigned in assessee’s favor wherein the assessee would be obligated to execute the contract on its own by using its own infrastructure, which would in turn, result in assessee deriving the entire contractual revenue and huge profits therefrom. There would be no need to make any adjustment on Arm’s Length principles. - assessee was justified in not charging any fees against the same - AT
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Income Tax:
Addition u/s 40(a)(ia) - Non-deduction of TDS - year end provisions was made by assessee in respect of expenses - As regards to the claim of the assessee that in subsequent Financial Year year-end provisions have been either reversed or paid subject to deduction of TDS, does not alter the legal position in so far as disallowance of expenses under section 40(a)(ia) for non-deduction of Tax at source. The law is very clear as per which TDS is required to be deducted when credit or payment whichever is earlier. - Addition confirmed - AT
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Income Tax:
TP Adjustment - Determination of arm’s-length price - Law does not permit the TPO or DRP to determine the arm’s length price on estimation or adhoc basis. - Accordingly assessee’s grievance of ad hoc determination of arm’s-length price for royalty paid by the TPO and the DRP succeeds. - AT
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Income Tax:
Late fees payable u/s 234E - Once, the AO has no power to levy any late filing fee for the return processed prior to 01.06.2015, then no such power can be exercised by the AO while passing rectification order/s under section 154 of the Act for the respective periods prior to 01.06.2015. - AT
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Income Tax:
Exemption u/s 11 - charitable or commercial activities - Fee charged and the quantum of income earned can be indicative of the fact that the person is carrying on the business or commerce and not charity - The petitioner has to be substantially self-sustaining in long-term and should not depend upon the Government, in other words, taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under the residuary clause "general public utility". - AT
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Income Tax:
Additions towards Unsecured loans and interest paid thereon u/s 68 & 69C - in respect of interest paid, TDS was deducted u/s 194A - in respect of payment of interest to these 27 parties, provisions of Section 69C of the Act had no application. Accordingly the addition made u/s 69C is hereby deleted. - AT
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Income Tax:
Penalty u/s 272A(2)(k) r.w.s. 200(3) - failure on part of assessee to file quarterly returns of TDS in Form 24Q and 26Q for the years under consideration within the stipulated time - AR was directed to file a chart by computing penalty from the date of making payment for both years. AO is directed to verify the same and restrict Penalty u/s.272(k)(2) to such amount as computed from date of deposit of TDS with Government. - AT
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Income Tax:
Taxability of long term capital gain - Section 2(47)(v) of the Act clearly stipulates that transfer of the immovable property comes into effect when possession of the property is handed over coupled with part performance of the contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. - AT
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Corporate Law:
Companies Fresh Start Scheme (CFSS) 2020 - Defaulting company - The Scheme is a fresh lease of life given to defaulting companies, which are not yet declared `Inactive’, to file their returns and do their businesses in accordance with law - The scheme is an ENABLER and not a DISABLER for defaulting but active companies. - The Petitioner would be entitled to avail of the Scheme to file documents of the defaulting company, which is still an active company whose name has not been struck off. - HC
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Corporate Law:
Benefit of ‘LLP Settlement Scheme, 2020’ dated 04.03.2020 read with the subsequent modification thereto vide Circular dated 30.03.2020 - the petitioner(s) are entitled to the benefit of the Scheme and they shall not be denied the same only on the ground that their documents were uploaded pursuant to the order passed by this Court in the present petitions, prior to 31.10.2019 - HC
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IBC:
CIRP Process - validity of order of the Presiding Officer under the Payment of Wages Act, 1936 - The order passed by the Presiding Officer under the Payment of Wages Act, 1936, is still-born and a nullity in law and cannot stand in view of the foregoing narrative and the provisions of law as enunciated in this order and consequently stands invalidated - A copy of this order may be served on the Presiding Officer so as to take note of this Tribunal's order and to refrain from acting against the interest of justice. - Tri
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IBC:
CIRP Proceedings - If a director or a personnel of the Corporate Debtor does not cooperate or creates hindrance or disobeys the instructions of the RP, the law is not toothless and can deal with him/them in a stringent manner. The applicant has acted in a most unruly manner, when, instead of cooperating with the instructions of the RP, he has chosen to level false and frivolous allegations against the RP, and attributing motives and using the unacceptable language, like "HARASSMENT" AND "UNDUE PRESSURE", without realizing that the RP is issuing instructions in performance of his statutory duties. The applicant should have realized that he was duty-bound to provide all the assistance and cooperation to the RP in taking IMMEDIATE custody of all the assets and records, and his failure or reluctance in doing so may land all the directors of the company in trouble. - Tri
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Service Tax:
Rejection of SVLDR scheme - it is clear that any investigation pertaining to the period from 2014 to 2016 by the authorities should not affect the declarations made by the petitioner in respect of the period from April, 2016 onwards. The contention of the respondents (Revenue) is that the investigation pertains to the period 2016–17 also and the respondents are yet to quantify and communicate the amount due. - . The Designated Committee is directed to decide the petitioner’s applications/declarations after giving an opportunity of hearing to the petitioner - HC
Articles
Notifications
Companies Law-
G.S.R. 590 (E) - dated
28-9-2020
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Co. Law
Companies (Meetings of Board and its Powers) Third Amendment Rules, 2020
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G.S.R. 589 (E) - dated
28-9-2020
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Co. Law
Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2020
DGFT-
34/2015-2020 - dated
28-9-2020
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FTP
Amendment in the Import Policy Condition No. 3 of Chapter 71 of ITC (HS)-2017, Schedule- I (Import Policy)
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33/2015-2020 - dated
28-9-2020
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FTP
Insertion of Policy Condition regarding import under all HS codes in Chapter 72, 73 and 86 of ITC (HS), 2017 to require compulsory registration under Steel Import Monitoring System (SIMS)
GST - States-
(35/2020)-FD 03 CSL 2020 - dated
26-9-2020
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Karnataka SGST
Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020.
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(34/2020)-FD 03 CSL 2020 - dated
26-9-2020
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Karnataka SGST
Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filled between 22.09.2020 to 31.10.2020.
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(33/2020)-FD 03 CSL 2020 - dated
26-9-2020
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Karnataka SGST
Seeks to give one time extension for the time limit provided under Section 31(7) of the KGST Act 2017 till 31.10.2020.
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(32/2020)-FD 03 CSL 2020 - dated
26-9-2020
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Karnataka SGST
Seeks to amend notification no.(17/2020) No. FD 03 CSL 2020, dated the 20th April, 2020
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26597-FIN-CT1-TAX- 0002 /2020 - dated
29-9-2020
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Orissa SGST
Notification to grant waiver/reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filed between 20.09.2020 to 31.10.2020
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26593-FIN-CT1-TAX- 0002/2020 - dated
29-9-2020
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Orissa SGST
Notification to grant waiver/reduction in late fee in furnishing FORM GSTR-10, subject to the condition that the returns are filed between 22.09.2020 to 31.12.2020
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F.12(46)FD/Tax/2017-III-241 - dated
28-9-2020
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Rajasthan SGST
Notification regarding waiver/reduction in late fee in furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020
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F.12(46)FD/Tax/2017-III-240 - dated
28-9-2020
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Rajasthan SGST
Notification regarding waiver/reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filled between 22.09.2020 to 31.10.2020
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F.12(46)FD/Tax/2017-III-239 - dated
28-9-2020
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Rajasthan SGST
Notification regarding one time extension for the time limit provided under Section 31(7) of the RGST Act 2017 till 31.10.2020
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (9) TMI 1107
Restoration of Registration Certificate of petitioner - Today, Mr. Harpreet Singh, learned senior standing counsel states that petitioner s registration has been restored retrospectively w.e.f. 06th November, 2018 in accordance with the Appellate Authority s order dated 15th June, 2020. HELD THAT:- The present writ petition is disposed of as satisfied.
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2020 (9) TMI 1106
Refund of unutilized input tax credit - time limitation - constitutional validity of Circular No.125/44/2019-GST dated 18th November 2019 - vires of Section 54 of the CGST Act, 2017 or not - HELD THAT:- Issue Notice. List on 09th December, 2020 along with W.P.(C) 6486/2020.
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2020 (9) TMI 1105
Non-constitution of GST Tribunal - Submission is that issues of facts and law both can be raised before the Tribunal in view of Sections 112 and 113 of the Act - HELD THAT:- The seized goods shall be released to the petitioner upon payment of specified tax along with 100 % penalty under Section 129(1)(a) of the Act. For the remaining amount, the petitioner shall furnish security other than cash and bank guarantee. Such payment shall remain subject to the final determination to be made in this matter. Learned State counsel shall also apprise the Court as to by what date the GST Tribunal would be constituted - List in the regular cause list after its publication resumes.
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2020 (9) TMI 1104
Classification of services - GTA Services or not (SAC 996791) - sub-contractor - Appellant would be issuing the consignment note to M/s. Posco ISDC Pvt. Ltd.in addition to the consignment note, issued by M/s. Posco ISDC Pvt. Ltd. to their clients - GST under forward charge mechanism - N/N. 0/2017-Central Tax (Rate), dated 22.08.2017 - input tax credit - Procedurally, is it correct to have two GTA Service Providers and two consignment notes for the same movement of goods, one issued by the Appellant as a sub-contractor and the other by M/s. Posco ISDC Pvt. Ltd. as the main contractor? - challenge to AAR decision. HELD THAT:- On perusal of the aforementioned meaning of the GTA, it is clearly seen that issuance of the consignment note is an essential condition for any person to act as GTA - On perusal of the CGST Act, 2017, it is revealed that the term consignment note is not defined anywhere in the CGST Act, 2017. However, the mention of the same was made under the explanation to Rule 4B of the Service Tax Rules, 1994. In the subject case, the Appellant is not receiving goods directly from the consignor or consignee of the goods, but from M/s. Posco ISDC Pvt. Ltd., who themselves are acting as GTA, where they are receiving the goods from the consignor/consignee, and issuing the consignment notes in respect thereof The Appellant is merely a Goods Transport operator here and not a GTA - Since, in the subject case, it is M/s. Posco ISDC Pvt. Ltd. who would be generating the E-way bill prior to the movement of goods by road, therefore, M/s. Posco ISDC Pvt. Ltd. would be the actual transporter. Now, once the identity of the transporter is revealed, which in the subject case is M/s. Posco ISDC Pvt. Ltd., the contention of the Appellant that they would also be acting as GTA in the proposed arrangement is not sustainable. In a single transaction of transportation of goods, as consignment note is an evidence of custody of goods taken from owner of the goods and the privity of contract exists between the owner of goods and the GTA, and thus, it is the GTA, which issues the consignment note. The Appellant is simply hiring out their transport vehicles to M/s. Posco ISDC Pvt. Ltd. for a consideration, hence, their services would be classified under the Heading 9966 of Notification No. 11/2017-C.T.(Rate), dated 28.06.2017, bearing the description rental services of transport vehicles . Appellant's contention wherein it has been argued that when the whole work is sub-contracted, the classification of the service cannot change - HELD THAT:- It is opined that the Appellant's contention is fallacious as it has been established above that the actual transporter in the subject case is M/s. Posco ISDC Pvt. Ltd, and not the Appellant, therefore, it would not be proper to say that the whole work in the subject case, which is transportation of the goods by road, acquired by M/s. Posco ISDC Pvt. Ltd. from their clients, have been sub-contracted to the Appellant. The Appellant is merely supporting M/s. Posco ISDC Pvt. Ltd. in their activity as the GTA by way of renting out their transport vehicle. Appellant's contention that the Advance Ruling Order has imposed restrictions on them in doing business as the order passed by the Advance Ruling Authority does not permit them to charge 12% GST on the forward charge basis in terms of Notification No.20/2017-C.T.(Rate), dated 22.08.2017 - HELD THAT:- It is observed that the ruling, passed by the MAAR, is in the context of the proposed arrangement propounded by the Appellant for the purpose of seeking Advance Ruling in the matter, where the Maharashtra AAR held that the activities carried out by the Appellant in the subject transaction, as discussed above, are not those of GTA. The Advance Ruling order does not debar the Appellant from acting as GTA in other transactions, where they enter into transport contract with the consignor or consignee directly. Order passed by AAR upheld.
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Income Tax
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2020 (9) TMI 1103
Allowability of deduction u/s 80IA(4)(iii) - as per revenue no single entity or its related enterprise can occupy more than 25% of the allocable area was violated - CIT-A allowed deduction - whether CIT(A) was justified in holding that the assessee is eligible for deduction while the condition that minimum number of 30 units should be operational for availing the benefit was not met since by 31.03.2010 only 16 units were operational? - HELD THAT:- When there is no counter findings placed on record by the Department, we do not find any reason to deviate from the view taken in assessee s own case for A.Y. 2011-12 [ 2018 (4) TMI 1821 - ITAT PUNE] and following the same, we are of the considered view that the relief provided by the learned Commissioner of Income Tax (Appeals) to the assessee allowing the claim of deduction u/s 80IA(4)(iii) of the Act was done correctly and the said relief provided to the assessee is sustained.
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2020 (9) TMI 1102
Computation of deduction u/s.10A - reducing the impugned expenses both from the export turnover as well as from the total turnover - HELD THAT:- The issue raised is squarely covered in favour of assessee by the judgment in the case of CIT v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] had categorically held that when expenses are reduced from export turnover, the same needs to be reduced also from the total turnover, while computing deduction u/s. 10A - DRP is justified in its direction that the impugned expenditure that is reduced from the export turnover need to be reduced also from the total turnover, while computing deduction u/s. 10A - Decided against revenue. Set off of brought forward losses - AO has reduced the brought forward losses from Bangalore (10AA unit) and Mumbai (10A unit) before computation of deduction u/s 10A/10AA - HELD THAT:- As relying on Yokogawa India Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] while holding that losses cannot be set off against profits of eligible unit. In view of the judgment of the Hon ble Apex Court, we direct the AO to calculate the deduction u/s.10A/ 10AA of the Act, without setting off the brought forward losses. It is ordered accordingly. Expenditure on buy-back of shares - revenue or capital expenditure - HELD THAT:- In view of the judgment of the Hon ble High Court of Karnataka in the case of CIT v. Motor Industries Co. Ltd. [ 2014 (10) TMI 1026 - KARNATAKA HIGH COURT] we hold that the expenses incurred by the assessee for buy-back of shares is allowed as a revenue expenditure.
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2020 (9) TMI 1101
TP Adjustment - adjustment arising out of performance guarantee provided by assessee to an entity - HELD THAT:- The bank guarantee was given by Bank of India. The bank utilized the guarantee facility sanctioned to assessee while sanctioning aforesaid bank guarantee to assessee s AE. The assessee, based on letter obtained from the bank, charged guarantee commission of 0.60% from its subsidiary. The Ld. TPO estimated the same @1%. We find that this issue is contained in assessee s own case for AY 2010-11. [ 2019 (9) TMI 437 - ITAT MUMBAI] as concluded that internal CUP in the shape of commission charged by the bank, would be most direct and reliable way to apply Arm s Length Principle. Further, when there was absolutely no loss to the assessee and entire cost was recovered from the AE, no further adjustment would be required. Applying the said principle to year under consideration, we find that the assessee has charged commission in accordance with the bank s sanction letter and therefore, no further adjustment, as proposed by Ld. TPO, would be justified. Accordingly, these grounds stand dismissed. Adjustment arising out of guarantee for advance payment provided by assessee to Chadian Company for Water Electricity (CCWE) - HELD THAT:- As decided in own case for AY 2010-11 . [ 2019 (9) TMI 437 - ITAT MUMBAI] Tribunal has concluded that the rate as applicable to performance guarantee would apply to this guarantee also. Following the same principle, we hold that the rate of 0.60% as adopted for performance guarantee to CCWE would apply to this guarantee also. Since, the assessee has already charged a rate of 0.60%, no further adjustment would be required. Accordingly, these grounds stand dismissed. Adjustment arising out of performance guarantee - The transaction is in the form of indemnity provided by the assessee to BEC with a view to secure the performance of the contract entered into by BEC with assessee s AE. The assessee did not charge any commission by submitting that the assessee was entirely compensated and therefore, no further charge was called for. TPO estimated the same @1%. - HELD THAT:- In assessee s own case for AY 2010-11 [ 2019 (9) TMI 437 - ITAT MUMBAI] Tribunal has concurred with assessee s submissions that the contract which was awarded to its AE would get assigned in assessee s favor wherein the assessee would be obligated to execute the contract on its own by using its own infrastructure, which would in turn, result in assessee deriving the entire contractual revenue and huge profits therefrom. There would be no need to make any adjustment on Arm s Length principles. Facts being pari-materia the same, respectfully following the same, we hold that the assessee was justified in not charging any fees against the same. These grounds stand dismissed. Corporate guarantees provided on behalf of its 2 AEs namely KEC Transmission LLC, USA and KEC US LLC, USA - International tarnsaction or not? - HELD THAT:- It is quite discernible that the assessee had definite obligation under the corporate guarantee and to say that that the same shall have no bearing on profits, incomes, losses or assets of the assessee would not be a correct proposition. Even as per assessee s own submissions, if the said guarantee was not provided, the assessee would have been obligated to infuse equity capital in its wholly owned SPV AEs with a view to enable downstream acquisition of SAE Towers Ltd. USA which would have entailed assessee s resources. This is further fortified by the fact that fact that guarantees have specifically been brought within the ambit of term international transactions by way of amendment to explanation (i)(c) to Sec.92B by Finance Act, 2012 w.e.f. 01/04/2002. Arguments that the said transactions could not be considered to be international transaction do not convince us and therefore, we hold that the same was to be benchmarked on ALP principles. Benchmarking rate of 2% as adopted by Ld. TPO - assessee s risk in such a case would be very low since both the AEs were assessee s subsidiaries only. Therefore, considering the fact that it was a corporate guarantee for which no fees was paid by the assessee and going by the ratio of the decision of coordinate bench of the Tribunal in Everest Kanto Cylinders Ltd. Vs. DCIT [ 2012 (11) TMI 1099 - ITAT MUMBAI] as affirmed by Hon ble Bombay High Court [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] we estimate the TP adjustments against both these transactions @0.20%. The Ld. TPO / Ld. AO is directed to recompute the same in terms of our above order. The grounds stand partly allowed. Mark-to-market losses arising on the foreign exchange contracts which were outstanding at the year-end - HELD THAT:- As evident from factual matrix itself, the issue is covered in assessee s favor by the decision of this Tribunal for AY 2009-10 and held that MTM losses on hedging contracts would be accrued losses and hence, an allowable expenditure. Additional ground - Education cess and higher and secondary education cess paid by the assessee - allowable as deduction while computing business income of the assessee - HELD THAT:- We admit the additional ground of appeal and direct Ld. AO to bring the relevant facts qua the same on record and re-adjudicate the same after affording reasonable opportunity of hearing to the assessee. This ground is admitted and allowed for statistical purposes.
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2020 (9) TMI 1100
Addition u/s 40(a)(ia) - Non-deduction of TDS u/s 194H - discount versus commission - Held that:- the assessee was not required to deduct TDS on the amounts of discount on sale of Set-top box and hardware, discount on sale of recharge coupon and vouchers, bonus or credit provided by assessee to subscribers, sales promotion expenses and distribution channel support expenses. - transaction between the company and distributor is on principal to principal basis and all the risk, loss, damages are transferred to distributor on delivery. Distributors are free to sale at any price below maximum retail price. In this regard, the assesse has filed the sample copy of invoices for sale of Set Top Box (STB) and other recharge coupons to prove that it is a sale but not services to come within the ambit of the definition of commission as defined under section 194H - Assessee is not required to deduct TDS on discount allowed on sale of Set Top Box and hardware, recharge coupons vouchers and disallowance of bonus or credit provided to subscribers including sales promotion expenses. Disallowance of year end provisions was made by assessee in respect of expenses - whether TDS is deducted in the subsequent years pursuant to bills received and payments made - HELD THAT:- No merit in the argument of the assessee that TDS provisions are not applicable when year-end provisions are made without crediting to respective parties account. To this extent, we are fully subscribed to the findings recorded by the learned AO as well as learned CIT(A). As regards to the claim of the assessee that in subsequent Financial Year year-end provisions have been either reversed or paid subject to deduction of TDS, does not alter the legal position in so far as disallowance of expenses under section 40(a)(ia) for non-deduction of Tax at source. The law is very clear as per which TDS is required to be deducted when credit or payment whichever is earlier. There is no error in findings recorded by the lower authorities in disallowing year-end provisions for non-deduction of TDS under respective provisions of the Act. Accordingly, we reject the ground taken by the assessee. Disallowance of interest expense u/s 36(1)(iii) - AO observed that the assessee had not allocated any interest expenditure against the capital WIP AO held that part of interest was allocable to such capital WIP and accordingly, he has disallowed proportionate interest expenditure - HELD THAT:- It is settled position of law that if own funds are used for acquisition of capital assets, then the question of disallowance of interest does not arise. Further, if there are funds available, both interest free and interest bearing, then a presumption can be made that the investments were made out of interest free funds available with the company, if the interest free funds are sufficient to meet the investment as held in the case of Reliance Utilities and Power [2009 (1) TMI 4 - BOMBAY HIGH COURT ] - In this case, on perusal of facts we find that the assessee has filed necessary evidences to prove availability of own funds which is sufficient to cover investment in capital work in progress. AO was erred in disallowing proportionate interest expenses u/s 36(1)(iii) of the Act. Hence, we direct the AO to delete disallowances of interest for both assessment years. Disallowance u/s 14A - HELD THAT:- Once, there is no exempt income earned for the year, then disallowance contemplated u/s 14A of the Act cannot be pressed into. In this case, the Revenue has not disputed the fact that the assessee has not earned exempt income for the year under consideration. Since, there is no exempt income for the year, the disallowance of expenditure contemplated u/s 14A of the Act cannot be made. CIT(A) after considering relevant facts has rightly deleted the addition made by the AO towards disallowance of expenses u/s 14A.
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2020 (9) TMI 1099
TP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- Assessee provided investment advisory services, in respect of listed Indian securities to its overseas AE. Investment Advisory Services refer to the support services provided by the Indian firms to the overseas fund managers in equity and general business research. Further, equity research relates to building and maintaining valuation models, ratio analysis, competitor analysis, comparable valuation method etc. Business research includes services, such as study and analysis of the industry of the target company, company profiles and study of the macroeconomic environment of the target country, thus companies functinally dissimilar with that of assessee need to be deselected from final list. ICRA Management Consulting Services Ltd. ( IMCSL ), Informed Technologies India Ltd. ( ITIL ), IDC (India) Ltd., Ladderup Corporate Advisory Pvt. Ltd. to be included as valid comparable and direct the TPO/AO to exclude Ladderup Corporate Advisory Pvt. Ltd. from the list of comparables. M/s. Motilal Ostwal Investment Pvt. Ltd ('MOAIPL ) is to excluded as it is engaged in diversified activities and that segmental reporting is not available. New Berry Advisors Ltd. ( NBAL ) is engaged in the business of marketing and distribution of financial products. Further, the notes to the financial statement mention that the company is in the business of distribution/marketing of financial products under the head Inventories , thus to be rejected.
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2020 (9) TMI 1098
TP Adjustment - Disallowance of the claim of adjustment for extraordinary expenses relating to recovery of production overheads, selling and administrative overheads, one time technological fee for Chennai metro in the Transport segment - HELD THAT:- Adjustment on account of extraordinary expenses in production overheads and selling and administrative overheads claimed by the assessee are not of any specific distinct expenditure. These are the regular expenses normally incurred by the assessee during the course of business. As rightly pointed out by the DRP, the assessee has proceeded to make adjustment in its profits despite the assessee being the tested party. There is nothing on record to suggest that in the comparables submitted, whether there was any adjustment for extraordinary and non-recurring items. This was required as evident from the various case laws referred by the DRP. Assessee itself being the tested party cannot adjust its profits without ensuring corresponding adjustment in the result of comparables. As regards the one-time technical assistance fee for Chennai Metrorail project is concerned, we find ourselves in agreement with the TPO that it is very much normal business expenditure of the assessee and same cannot be said to be extraordinary. Assessee s submission that it was Assessing Officer s duty to bring the details of adjustment required in comparables is totally unsustainable as the initial duty in this regard is cast on the assessee. The assessee has miserably failed in discharging this initial duty. Accordingly, in our considered opinion, the adjustment sought by the assessee in this regard has rightly been disallowed by the authorities below. Adjustment, if any, must be made only in respect of international transactions pertaining to Transport segment of the assessee and not the segment as a whole. In our considered opinion, the above is also a sound and consistent proposition and we are of the considered opinion that the same should be applied for the current year also - TPO is directed to make the computation by making the adjustment to AE transaction to Transport segment. Determination of arm s-length price for royalty paid - disallowance of Royalty payment in the Power segment - royalty paid for trademark is 1% as per DRP - HELD THAT:- Determination of arm s length price as Nil by the TPO is not at all sustainable. For the Royalty for technology license, the DRP contradicted itself and did exactly what the TPO has done with a difference that after holding that the comparable agreement submitted in this regard by the assessee are different, it proceeded to fix the rate of royalty in this regard the rate of 1% of net sales to AE by simply observing that the assessee has already paid royalty rate of 1% with regard to trademark. DRP having agreed with the TPO that comparables and agreements submitted by the assessee are different and are not comparable, the DRP cannot wash his hands by picking up an arbitrary rate that since the royalty paid for trademark is 1%, the same rate is to be applied for royalty rate for technology license. The same is not at all based upon cogent reasoning and due analysis Law does not permit the TPO or DRP to determine the arm s length price on estimation or adhoc basis.See M/S. JOHNSON JOHNSON LTD. [ 2017 (3) TMI 1520 - BOMBAY HIGH COURT] Departmental Representative s plea in this regard is that since the authorities below have failed to follow the prescription of the Act and law, the matter should be remanded to them is not at all sustainable as we find that assessee has duly submitted the comparables and agreements and if the authorities below rejected the same, but failed to follow the prescription of Act, the duty cast upon them, the assessee cannot be put through the rigours of 2nd round of litigation without any fault of its own. In this regard we draw support from the above decision from Hon'ble Jurisdiction High Court which confirmed the order by ITAT similar to this case. Accordingly assessee s grievance of ad hoc determination of arm s-length price for royalty paid by the TPO and the DRP succeeds. Accordingly, the ground raised by the assessee in this regard is allowed. As already upheld the DRP action of sustaining the 1% rate of royalty for Assessment Year 2013-14 for the trademark, the Revenue s grounds against the DRP direction, in this regard to uphold the computation at Nil by the TPO fails in view of our discussion herein above. Addition of unpaid service tax payable on the receivables not collected by GEPIL as on 31 March 2010 - whether AO erred not allowing deduction of service tax paid till 30 September 2010 i.e. due date of filing ROI? - HELD THAT:-This issue is covered in favour of the assessee by the ITAT decision in the case of G.E. Power India Ltd.[ 2019 (6) TMI 1526 - ITAT MUMBAI] wherein a delete the disallowance made by the assessee under section 43B. Addition of TPA to the book profits for the purposes of section 115JB - Whether book profits of a company cannot be adjusted except as provided in Explanation 1 of Section 115JB(2), and transfer pricing adjustment is not one of the classes of adjustments provided in that Explanation? - HELD THAT:- We find that this issue is to be decided in favour of the assessee on the touchstone of Hon ble SC decision in Appollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] and several decisions of Hon ble Bombay High Court, following the same, wherein it is held that no adjustment in book profit is to be done unless mandated in the Act. Since, the Act in Explanation (1) of section 115JB(2) does not provide for any such adjustment, this issue is decided in favour of the assessee.
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2020 (9) TMI 1097
Late fees payable u/s 234E - intimation issued under section 200A(3) - default in not filing TDS returns in time - Rectification u/s 154 - Assessee stressed that no fee can be levied under section 234E of the Act for the periods prior to 01.06.2015, when the intimation under section 200A of the Act was issued - Scope of amendment - HELD THAT:- The machinery provisions of charging the said fee as per clause (c) of Section 200A(1) of the Act was inserted by legislature with effect from 01.06.2015. We find that the said issue has been decided in the case of Fateh Raj Singhvi Ors. vs UOI [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] and it is held that section 200A of the Act inserted with effect from 01.06.2015 had prospective effect and was not applicable for different quarters of assessment years prior to 01.06.2015. Power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. Provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E - intimation issued by the AO u/s 200A in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. The case of the assessee before us was that all original intimation/orders were issued by the AO before 01.06.2015. He pointed out that for the Assessment Year 2013-14, the orders were issued in year 2014 and for the balance appeals, orders were issued before June 2015. However, in all the cases, the AO has passed order under section 154 which are all dated 05.01.2019. Admittedly, the Revenue is not in appeal against the first finding of the CIT(A) that AO has no power to levy the fees for the period while processing the TDS returns before 01.06.2015. Once, the AO has no power to levy any late filing fee for the return processed prior to 01.06.2015, then no such power can be exercised by the AO while passing rectification order/s under section 154 of the Act for the respective periods prior to 01.06.2015. On this ground also, the assessee succeeds and there is no merit in the levy of late filing fees for the period prior to 01.06.2015. - Decided in favour of assessee.
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2020 (9) TMI 1096
TP Adjustment - inclusion/exclusion of TCS-e-Serve Ltd. by the TPO - HELD THAT:- One of the key reason why the TCS-e-serve Ltd. cannot be held to be comparable with the assessee company which is providing back office support services, i.e., ITeS/BPO services, because TCS-e-Serve in addition to ITeS/BPO services also render technical services like software testing and validation of software which falls under software development services activity. Admittedly, the assessee is a low risk captive unit involved in provision of back office support service to it s group companies for which it is remunerated at cost plus basis and is not exposed to any kind of risk. Whereas, the TCS-e-serve Ltd. bears significant risk such a macro economic risk, regulatory risk, financial risk and risks from operations etc. which clearly indicates that the TCS-e-serve Ltd is a full risk bearing company. On risk analysis also it cannot compared with the assessee. Besides this, TCS-e-serve Ltd is not comparable on account of intangible held by this company and has large scale of operation and huge brand value. As in the case Avaya India Ltd. vs. ACIT [ 2019 (7) TMI 1279 - DELHI HIGH COURT] has upheld the exclusion of TCS-e-Serve on account of large scale of operations, huge brand value, lack of segmental information with the comparables who are simply involved ITeS/BPO services which are captive services provider. Accordingly, we direct the TPO to exclude the TCS-e- Serve Ltd. from the comparability list and determine the Arms Length Price. Accordingly, the appeal of the assessee is treated as allowed.
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2020 (9) TMI 1095
Exemption u/s 11 - charitable or commercial activities - assessee was earning huge profits by providing data connectivity to its subscribers in lieu of consideration as per its objects and nowhere, charity can be seen in the whole process - charitable or commercial activities - assessee is an autonomous society established under the aegis of Department of Information Technology, Ministry of Communications and Information Technology, Government of India, as a non-profit organization - HELD THAT:- As decided in own case [ 2018 (1) TMI 189 - ITAT DELHI ] activity of the petitioner involves promotion, propagation and spreading awareness and knowledge about global coding identification system GS1. The entire expenditure of the petitioner has to be taken into consideration and cannot be ignored. There are stipulations in sections 11, 13, etc., of the Act to prevent misuse of or siphoning of funds, bar/prohibit gains to related persons, stipulations of time limits for use of funds, which are effective checks and curtail and deny benefit in cases of abuse. There is no such allegation or contention of the Revenue in the present case. Fee charged and the quantum of income earned can be indicative of the fact that the person is carrying on the business or commerce and not charity, but we must keep in mind that charitable activities require operational/running expenses as well as capital expenses to be able to sustain and continue in long run. The petitioner has to be substantially self-sustaining in long-term and should not depend upon the Government, in other words, taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under the residuary clause general public utility . The impugned order does not refer to any statutory mandate that a charitable institution falling under the last clause should be wholly, substantially or in part must be funded by voluntary contributions. No such requirement has been pointed out or argued. A practical and pragmatic view is required when we examine the data, which should be analyzed objectively and a narrow and coloured view will be counter-productive and contrary to the language of section 2(15) - Decided in favour of assessee.
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2020 (9) TMI 1094
Assessment u/s 153A - additions/disallowances made in the assessments of the appellant and M/s IQCIPL which were unabated [since assessment of AY 2013-14 was non-pending] on the date of search, could be held to be sustainable on facts and in law? - HELD THAT:- Additions/disallowances made by the AO on account of alleged on-monies/cash received on sale of flats car parks in the Shiromani Project was clearly beyond the scope of authority vested under section 153A owing to absence of any incriminating material or evidence deduced as a result of search conducted at the premises of the assessee in so far as unabated assessment for AY 2013- 14 is concerned. At the time of hearing before us, neither the Ld. CIT DR was able to controvert this contention of the Ld. AR nor the grounds of appeal preferred by the revenue assails the aforesaid finding of fact by the Ld CIT(A). Therefore we find that the aforesaid factual finding of the Ld. CIT(A) crystallizes and therefore we do not see any reason to interfere with the order of the Ld. CIT(A) on this matter and confirm the finding of Ld. CIT(A) and accordingly hold that the documents ID marked MSL/23 Pages 1 to 3, MSL/8 Page 13, SJ/MHD/MZ Page 2 and MSL/21 Page 32 to 36 also did not constitute incriminating material or evidence qua the assessee. Additions made u/s 68 69C in the hands of the assessee and M/s IQCIPL (since merged into the appellant company) - addition had referred to the statements of so-called entry operators recorded by different officers of Income-tax Department between the years 2013 to 2015 - HELD THAT:- Third party statements referred by the AO to justify additions without being tested by cross examination cannot be the basis for making addition u/s 68 69C both in the case of M/s. IQCIPL and the appellant/assessee and we hold that these statements with the legal infirmities pointed out does not constitute as an incriminating material unearthed in the course of search conducted upon the assessee and in that view of the matter, the aforesaid additions made by the AO were unsustainable in law and on facts. Addition of cash payments made towards professional fees and purchases - HELD THAT:- Seized documents referred by the AO for justifying the various addition/s made in the assessment orders passed in the name of the appellant/assessee and M/s IQCIPL, which has since merged with the assessee, did not constitute incriminating material and therefore no additions were legally permissible in the assessments framed u/s 153A for the AY 2013-14 for which the assessments did not abate when the search was conducted on 22-06-2016. Decided in favour of the assessee and against the Revenue. Addition made on account of alleged on monies (cash) received upon the sale of flat and car park(s) to M/s Satyam Bubna (HUF) in the Shiromani Project - HELD THAT:- Statement of Shri Satyam Bubna recorded u/s. 132(4) of the Act (supra at para 20) and the action of AO of the Satyam Bbna HUF not to draw any adverse inference against Satyam Bubna HUF on the very same material discovered in search from their premises and the fact that in the subsequent search in assessee/appellant s premises did not yield any corroborative material, and in the absence of any other incriminating material to support the view of AO, no addition was warranted. Moreover, we note that assessee had filed corroborative material and evidence which substantiated that the entire sale consideration was received upon sale of flat car park to M/s Satyam Bubna HUF was through proper banking channel. We accordingly do not find merit in the Ld. CIT(A) s action of confirming the addition by way of alleged on-monies/cash received upon sale of flat car park to M/s Satyam Bubna HUF u/s 68. Addition u/s 68 - extrapolating unaccounted sales across all units sold by the appellant in Shiromani Project - HELD THAT:- AO had made independent enquiries from all the flat purchasers in the Shiromani Project and despite such enquiries, the AO did not find any statement/material or transaction which would in any manner suggest let alone prove that the other flat purchasers had paid any part of the consideration in cash/ onmonies over and above the declared sale consideration. In absence of any such material (oral or documentary) therefore, we find merit in the Ld. CIT(A) s conclusion that the extrapolation made by the AO was per-se arbitrary and un-reasonable, therefore he rightly deleted the addition made. On this score, these grounds of the Revenue fail. Additionally, we also find merit in the Ld. CIT(A) s reliance on the following decisions holding that the theory of extrapolation cannot be applied on mere theoretical or hypothetical basis in absence of any incriminating corroborative evidence or material brought on record by the AO to warrant the same. Unsecured loans and interest paid thereon u/s 68 69C - HELD THAT:- We note that no addition u/s 68 of the Act in respect of the loans brought forward from the earlier years was made in the past assessments. In the circumstances therefore we find that if in the past assessments, the Revenue did not draw adverse inference in respect of the principal loan amounts received from these 27 parties, then there was no apparent reason for the AO to dispute and disbelieve the genuineness of the transaction involving only the interest payment. We also note that in respect of interest paid during the relevant year, the appellant had complied with relevant provisions of Section 194A of the Act [TDS] and necessary evidence in respect thereof was also furnished. In the circumstances we find that in respect of payment of interest to these 27 parties, provisions of Section 69C of the Act had no application. Accordingly the addition made u/s 69C is hereby deleted. Loans taken from eight parties - disallowance u/s 69C being interest paid by the appellant on these loans - HELD THAT:- in the proceedings before the Settlement Commission for the past years, identity and creditworthiness of loan creditors were questioned by the Revenue but the Settlement Commission accepted the genuineness of the appellant s loan transactions with the loan creditors. In the circumstances since the loans aggregating to ₹ 11,97,00,000/- were received from the bodies corporate, who had also advanced loans in the earlier years, and there being no change in the factual matrix and the nature of documentation produced in support of the loan transactions being same, we do not see any reason to take contrary view - addition made under Section 68 of the Act in respect of these loan creditors is hereby deleted. Consequent to our said finding, we also direct the AO to delete the disallowance u/s 69C being interest paid by the appellant on these loans. Unaccounted transactions - CIT(A) deleted the disallowance after noting that the entries were recorded in the regular books of accounts and therefore could not be considered to be unaccounted transactions of the appellant/assessee - HELD THAT:- We note that the persons to whom the payments were made in cash were staff of the appellant/assessee through whom the payments were made for meeting expenses of the appellant. The Ld. CIT, DR was unable to controvert this factual finding of the Ld. CIT(A). We note that since the payments were made to staff members which facts were duly recorded in the regular books of accounts, the additions on the ground of being unaccounted payments was rightly deleted by the Ld. CIT(A). Validity of assessment - scheme of amalgamation conceived - notice u/s 143(2) of the Act was issued in the name of non-existent entity, it rendered the entire proceedings and consequent order to be nullity in the eyes of law. Addition on account of undisclosed expenses (from the seized material-MSL-8, page-15) - AO has made the addition based on this fact that from a perusal of MSL-8 page 15 it reveals that the assessee has received sale consideration of ₹ 10 lacs on the sale of servant quarter to a customer Manoj Rathi without entering it in the regular books of account - CIT-A deleted addition - HELD THAT:- The conclusion of the Ld. CIT(A) on the facts discussed cannot be termed perverse and is a plausible view for the reason that the AO has assumed facts from a perusal of MSL-8 page 15 that the assessee has received sale consideration ₹ 10 lacs from Manoj Rathi in respect of Swarnamani project. We note that the AO has not made any attempt to summon Shri Manoj Rathi and confront him with MSL-8 page 15 and recorded his statement as to whether he has given ₹ 10 lacs to assessee on 21.06.2016 for the servant quarter in the said Swarnamani project. In the absence of any enquiry whatsoever, the hand written parchi/loose sheet cannot be the basis for the assumption of adverse facts against the assessee and, therefore, the Ld. CIT(A) rightly deleted the addition and, therefore, we confirm the action of the Ld. CIT(A).
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2020 (9) TMI 1093
TP Adjustment - comparable selection - HELD THAT:- Assessee which is a captive software development service provider and renders software development and solutions and ITES to support the global contracts negotiated by Aspect US and other affiliates, thus companies functionally dissimilar with that of assessee need to be deselected. Information Technology Enables service segment - Exclusion of company functionally dissimilar and who fails the TPO s own filter of export turnover in excess of 75% of total sales. Determining a negative working capital adjustment in both the SWD services Segment and ITeS segment - HELD THAT:- The Assessee is running the business without any working capital risk as compared to the comparables. Therefore, requirement for adjustment of negative working capital does not arise. negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis - Ground of Assessee is allowed. Re-computation of deduction under Section 10A by reducing travel expenses incurred in foreign currency and communication charges only from export turnover - HELD THAT:- Although the DRP rejected the primary contention of the Assessee that neither the telecommunication charges nor the travel expenses ought to be reduced from its export turnover, it accepted its alternate contention that they should also be reduced from its total turnover by following the decision of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] upheld by the Hon ble Supreme Court in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] . Accordingly, it directed the AO to exclude the above expenses from both its export and total turnovers while computing the deduction allowable under Section 10A. Thus, on the basis of the DRP s above directions, the disallowance under Section 10A came to be deleted in toto in the final assessment order. - Decided against revenue.
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2020 (9) TMI 1092
Penalty u/s 272A(2)(k) r.w.s. 200(3) - failure on part of assessee to file quarterly returns of TDS in Form 24Q and 26Q for the years under consideration within the stipulated time - HELD THAT:- Penalty u/s 272A(2)(k) r.w.s. 200(3) - failure on part of assessee to file quarterly returns of TDS in Form 24Q and 26Q for the years under consideration within the stipulated time - Non-Availability of accountant - New accountant took charge with assessee s office on 15/08/2010. Therefore, reasoning that, assessee was unable to file returns, due to non availability of accountant cannot be accepted atleast for assessment year 2011-12. Delay due to illness of MD - Considering the illness of Managing Director, during relevant period, alternate submission of Ld.AR to restrict penalty to be computed from date of payment of TDS amount to the credit of Government could be accepted. AR was directed to file a chart by computing penalty from the date of making payment for both years. AO is directed to verify the same and restrict Penalty u/s.272(k)(2) to such amount as computed from date of deposit of TDS with Government. - Decided partly in favour of assessee.
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2020 (9) TMI 1091
Validity of reopening of assessment u/s 147 - notice after the period of four years from the end of the relevant assessment year - Capital gain computation invoking the provisions of section 50C - HELD THAT:- Just because there were few mistakes committed on the unregistered notarized sale deed, the fact that the amount received by the assessee towards the sale consideration of the property and the handing over the possession of the property cannot be disputed. Section 2(47)(v) of the Act clearly stipulates that transfer of the immovable property comes into effect when possession of the property is handed over coupled with part performance of the contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. In the instant case, it is apparent that on 27/12/2003 the assessee had received the part consideration of ₹ 5 lakhs and the possession of the property was also handed over as evident from the bank statement of the assessee and the unregistered notarized sale deed. Assessee would be exigible towards capital gain tax only for the AY 2004-05 and not for the relevant AY 2007-08. It is also pertinent to mention that just because capital gain accrued to the assessee has escaped tax in the AY 2004-05, the same cannot be brought to tax subsequently in the AY 2007-08 as per the provisions of the Act. Therefore, hereby set aside the order of the CIT (A) and further direct the Ld. AO to delete the addition made and enhanced in the hands of the assessee towards LTCG. - Decided in favour of assessee.
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2020 (9) TMI 1090
Reopening of assessment u/s 147 - Validity of reason to believe - overstatement of capital fund of assessee trust - HELD THAT:- As noticed from the documents submitted by the assessee that this issue was already been questioned by the AO at the time of making original assessment u/s.143(3). In response to this, the assessee submitted his reply and financial statement before the AO and the notes of account were also appended with the financial statements. Documents available before us that this case has been reopened by the AO on the basis of audit objection in regard to capital funds. The assessee had also duly replied of the audit objections as per his letter which is placed on record. Details of capital funds were also submitted before the AO, which means this issue was already been examined by the AO at the time of framing original assessment. In absence of any new material pointed out by the assessee in the reasons recorded, the reassessment u/s.147 of the Act is null and void and we quash the reassessment order passed by the AO on legal ground. Since we have already quashed the reassessment order passed by the AO on legal ground, other grounds on merits need no adjudication. Thus, the appeal of the assessee is allowed on legal ground.
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Corporate Laws
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2020 (9) TMI 1089
Benefit of LLP Settlement Scheme, 2020 dated 04.03.2020 read with the subsequent modification thereto vide Circular dated 30.03.2020 - Section 460 of the Companies Act, 2013 - plea of the petitioner(s) in the present applications is that they have been denied the benefit of the Scheme only on the ground that they uploaded the forms pursuant to the order dated 06.12.2018 of this Court - HELD THAT:- This, in my opinion, cannot be a valid ground for denying the benefit of the Scheme to the petitioners. The petitioner(s) cannot be denied the benefit of the Scheme as such denial would be totally arbitrary and unreasonable. The petitioner(s) cannot be put in a position worse than those who never challenged the position prevailing before the announcement of the Scheme, before this Court. It is held that the petitioner(s) are entitled to the benefit of the Scheme and they shall not be denied the same only on the ground that their documents were uploaded pursuant to the order passed by this Court in the present petitions, prior to 31.10.2019 - Petition disposed off.
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2020 (9) TMI 1088
Companies Fresh Start Scheme (CFSS) 2020 - Defaulting company - Publication of the name of the Petitioner in the list of disqualified directors - Disqualification as a director under Section 164 of the Companies Act, 2013 - alleged non-compliance by DCDPL in filing its returns from 2014-2017. Whether the DIN of the Petitioner is liable to be activated for the two companies ABMR and DCD Grand? - HELD THAT:- The DIN of the Petitioner herein was deactivated and he was disqualified prior to the proviso to Section 167(1)(a) taking effect. Thus, qua ABMR and DCD Grand, the Petitioner s disqualification is not sustainable. Whether the Petitioner can be considered as a Director of DCDPL? - HELD THAT:- The ROC s stand that the shareholders can nominate a new director and approval for the same can be sought, would not be an answer, as the same could in effect result in dummy directors being appointed to Companies, which is exactly what the new provisions may have intended to avoid. In any event, so long as the present case is covered by the Mukut Pathak [ 2019 (11) TMI 319 - DELHI HIGH COURT ] decision, the Petitioner does not demit office and would be entitled to act as a Director in DCDPL. Whether the Petitioner can file the Returns on behalf of the defaulting company DCDPL, which wishes to avail of the Scheme? - HELD THAT:- The answer to the same would be in the affirmative. As held by this Court recently, vide order dated 2nd September 2020, in Sandeep Agarwal Anr. Vs. Union of India Anr [ 2020 (9) TMI 175 - DELHI HIGH COURT ] the purpose of the Scheme is to provide an opportunity for active companies, who may have defaulted in filing of documents, to put their affairs in order. The Scheme is a fresh lease of life given to defaulting companies, which are not yet declared `Inactive , to file their returns and do their businesses in accordance with law - The scheme is an ENABLER and not a DISABLER for defaulting but active companies. The Petitioner would be entitled to avail of the Scheme to file documents of the defaulting company, which is still an active company whose name has not been struck off. Petition allowed.
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2020 (9) TMI 1087
Approval of Scheme of Arrangement - approval for their proposal for acquisition of front-end retail pharmacy business of the Transferor Company by the Transferee Company for a total sale consideration - HELD THAT:- After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated between the petitioner companies would be beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement appended as Annexure 4 with the Company Petition as well as the prayer made therein - Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. While approving the Scheme as above, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. It is further clarified that this approval shall not be construed as an approval for any regulatory compliance required to be done or obtained under the appropriate statutes. Petition allowed.
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2020 (9) TMI 1086
Approval of the Scheme of Amalgamation and Arrangement - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The objections/observations to the Scheme received from RD, RoC, OL, BSE, NSE, IT Department and the Workers Union have been adequately replied by the Petitioner Company and hence, there is no impediment in the sanction of the Scheme. The Scheme is approved and we hereby declare the same to be binding on all the shareholders and creditors of the Petitioner Companies and on all concerned. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law. With the sanction of the Scheme, the Transferor Companies shall stand dissolved without undergoing the process of winding up. The scheme is approved.
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2020 (9) TMI 1085
Approval of the Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by the Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme of which sanction is sought under Section 230-232 of the Companies Act of 2013 will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors - Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules. Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and no Objections of BSE and NSE and also in the absence of any objection against the Scheme; there appears to be no impediment in sanctioning the present Scheme - Scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2020 (9) TMI 1084
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The facts and circumstances of the case as detailed, has clearly established that the Petitioner is using the provisions of Code with main object to recover the alleged due rather than to seek to initiate CIRP on justified grounds. It is also relevant to point out here that role of Operational Creditor, who filed case U/s. 9 of the Code, will be nominal during the process of CIRP, and it is dominated by Financial Creditors. Therefore, the settled principle of law that provisions of Code cannot be invoked to recover alleged/disputed due, would be more applicable to the Operational Creditors rather than Financial Creditors, who filed cases U/s. 7 of Code. Therefore, it is to be held that the Petitioner has invoked the provisions of Code with an intention to recover alleged due rather than to justify its case to initiate CIRP in terms of object of the Code. Principles of Double Jeopardy - HELD THAT:- It is also relevant to point out here that legal principle of double jeopardy would also applicant to the instant case, as the Petitioner has admittedly invoked provisions of N.I Act for dishonour of cheques issued by the Respondent, which is sub-judice. The Adjudicating Authority cannot enter into above disputed issues, in summary proceedings as contemplated under provisions of Code. The instant Company Petition is filed with an intention to recover the alleged outstanding amount rather than to seek initiation of CIRP in respect of the Corporate Debtor, which is against the object of the Code. The Petitioner cannot be permitted to bargain for settlement of alleged dues, in a case filed under Section 9 of Code and it is for the Parties to settle those issues between them. Therefore, the instant Petition is not maintainable under the provisions of Code. Petition dismissed as not maintainable.
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2020 (9) TMI 1083
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Settlement of alleged dues - existence of debt and dispute or not - HELD THAT:- The instant Company Petition is filed with an intention to recover the alleged outstanding amount rather than to seek initiation of CIRP in respect of the Corporate Debtor, which is against the object of the Code. The Petitioner cannot be permitted to bargain for settlement of alleged dues, in a case filed under Section 9 of Code. Petition not maintainable and is dismissed.
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2020 (9) TMI 1082
Rejection of the resolution plan - CIRP process - section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- A reading of the mail issued by the RP and the copy of minutes produced before us prima facie satisfied that RP placed the documents submitted by the applicant and the Plan before the CoC and from the available document as on 18.06.2020, the applicant was found ineligible as one of the directors of the applicant who is also a director of ISL was in the list of defaulter, fall under section 29-A(b) of the Code. Even according to the applicant he was unable to place all the documents relating to disqualification as the bank has not given proof proving that the bank has removed the Ind Synergy Ltd. (ISL) from the RBI defaulters list and an email dated 22.06.2020, issued by Indian Overseas Bank, placed before us at the time of hearing that the bank has removed the said company from the list of defaulters. So as on 18.6.2020 the applicant was a defaulter as per the list. In view of the above said circumstances we do not find any merit in the application. Application dismissed.
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2020 (9) TMI 1081
Approval of the Resolution Plan - Section 31 of the Code read with regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- There appears to be no discrimination in the resolution plan in respective class of creditors, as same treatment is provided to similarly situated each class of creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors - As a sequel to the aforesaid discussion it is seen that clause (b) of sub-section (2) of Section 30 of the Code stands satisfied. All the requirements of Section 30(2) are fulfilled and no provision of the law for the time being in force appears to have been contravened - In respect of provisions of Regulation 39 (4) a copy of performance security as deposited by resolution applicant has been placed on record. It seen that Bank Guarantee of ₹ 2 Crores issued by DCB Bank cover from 29.02.2020 to 28.11.2020 has been submitted by resolution applicant - Resolution Professional has confirmed compliance of Section 38(2) and (3) in the compliance filed alongwith the application. Resolution plan is approved - application allowed.
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2020 (9) TMI 1080
Issuing directions to the respondent/IRP, to refrain from creating undue pressure upon him and harassing him, given his age, by threats and or other means, and compel him to support the respondent during the currency of this pandemic on the pretext of CIRP timelines etc. - HELD THAT:- The applicant/CMD and all other directors and personnel were legally bound to extend all types of assistance and cooperation to the RP in the performance of his statutory duties assigned to him by the Code, and any hindrance or obstruction caused or intended to be caused by the CMD/directors and other personnel shall subject them to legal consequences. None of the contentions raised and the allegations levelled by the applicant has been able to convince us. The applicant being 62 years, if unable to himself do, could have directed some other director or personnel to provide access to the office premises so that the RP could have taken possession of the relevant record. He was also legally duty-bound to provide all the detailed information and records, including the sale deeds relating to Jaipur property and documents relating to lease and shareholding of the Australian Company. The lockdown had started about two months after the order of CIRP had been passed by this Adjudicating Authority. If a director or a personnel of the Corporate Debtor does not cooperate or creates hindrance or disobeys the instructions of the RP, the law is not toothless and can deal with him/them in a stringent manner. The applicant has acted in a most unruly manner, when, instead of cooperating with the instructions of the RP, he has chosen to level false and frivolous allegations against the RP, and attributing motives and using the unacceptable language, like HARASSMENT AND UNDUE PRESSURE , without realizing that the RP is issuing instructions in performance of his statutory duties. The applicant should have realized that he was duty-bound to provide all the assistance and cooperation to the RP in taking IMMEDIATE custody of all the assets and records, and his failure or reluctance in doing so may land all the directors of the company in trouble. Application dismissed.
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2020 (9) TMI 1079
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - novation of Contract or not - pending civil suit for recoveries of the amount dues before the Hon'ble Bombay High Court - HELD THAT:- While admitting the petition under Section 7, the only aspect relevant is that there is a debt and default and in the instant case, we find an express provision and obligation of repayment under the Debenture Trust Deed and further that the Corporate Debtor defaulted in paying monies under the Debenture trust deed and also under the Pari Passu agreement executed by the parties to facilitate and secure payment of monies due to the Petitioner. The primary agreement of loan namely the Debenture Trust Deed executed by parties under which the Debentures were issued to the Debenture Holders was sought to be confirmed by execution of Pari Passu Agreement and therefore it can be said that two distinct Agreement ensures to the benefit of petitioner's right of receiving payments and non-payment of monies by the Corporate Debtor or PNB demonstrates a clear liability and default, thus an action to initiate CIRP can be triggered. The nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that there is a Default as defined under section 3(12) of the Code on the part of the Debtor. The two essential requirements, i.e. existence of 'debt' and 'default', for admission of a petition under section 7 of the I B Code, have been met in this case. Petition admitted.
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2020 (9) TMI 1078
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Section 9 of the IBC Code 2016 says that after the expiry of period of 10 days from the date of delivery of the notice or invoice demanding payment under Section 8(1) IBC. if the Operational Creditor does not receive the payment from the Corporate Debtor or notice of the dispute has not been raised by the Corporate Debtor then the Operational Creditor may file an application before the Adjudicating Authority. Corporate Debtor has not raised the dispute or notice of dispute as required under Section 8(2) of the IBC within 10 days from the date of receipt of demand notice hence, of course, after filing the reply to the demand notice he has raised dispute that Operational Creditor has charged abnormal, unjust and exorbitantly high price from the Corporate Debtor for the service and in support of that they have enclosed the What's app communication being made between tone VM and Hindustan Naresh Yadav since, notice of dispute has not been raised within the period prescribed under Section 8(2) of the IBC, therefore, in our considered view that cannot be taken into consideration when the Corporate Debtor in response to summons appear and filed the reply. The Corporate Debtor has not denied this fact that service has been rendered by the Operational Creditor the only grievance of the Corporate Debtor is that Operational Creditor has charged abnormal, unjust and exorbitantly high price from the Corporate Debtor, we have already held that Corporate Debtor has not raised the dispute by filing reply within 10 days as prescribed under Section 8(2) of the IBC, rather filed the reply after 10 days of the delivery of demand notice. Moreover, we held that What's app communication is in between Hindustan Media Ventures Ltd. and Corporate Debtor and not with the Operational Creditor and except that there is no other document to show that record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. In view of Section 9(5)(i)IBC, the Adjudicating Authority has to see that the application is complete and there is no payment of the unpaid operational debt. the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor and no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility: and if these are established by the Operational Creditor then Adjudicating Authority has no option but to admit the application - in the case in hand it has been established by the Operational Creditor that there is no payment of unpaid operational debt, the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor and no notice of dispute has been received by the operational creditor within 10 days from the receipt of demand notice or record of dispute in the information utility. Application admitted - moratorium declared.
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2020 (9) TMI 1077
Liquidation of Corporate Debtor - Section 33(1), 33(2) 34(1) of the Insolvency Bankruptcy Code - HELD THAT:- It is noted that the Corporate Debtor was admitted in to Corporate Insolvency Resolution Process - It is found that, no Resolution Plan has been received during Corporate Insolvency Resolution Process nor EOI's have been received. In these circumstances, there remains no other option but to pass an order of Liquidation of the Corporate Debtor and this has also been decided by the Committee of Creditors in its meeting dated 26.09.2019 with 100% voting. Considering the factual situation of the matter and applicable legal provision(s), to be ordered that company to be liquidated. This to be further ordered that the Resolution Professional shall act as 'Liquidator'. Application allowed.
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2020 (9) TMI 1076
Directions upon the promoters, directors of the corporate debtor to hand over the management of the affairs of the company for smooth running and completion of the CIRP - HELD THAT:- It is certain that the directors of the CD not giving maximum assistance to see that their company is to be resolved with in the timeline. It is submitted by the RP that CD is an MSME, and nothing prevent them in submitting any viable resolution plans and that no such plan also forthcoming from them. As per section 19 of the Code the directors of the CD and any other person associated with the management of the CD shall extend all assistance and cooperation to the IRP as may be required by him in managing the affairs of the CD. Being satisfied that the directors and their associates are not inclined to extend cooperation to the IRP this is a fit case wherein directions as prayed for is to be issued. The directors of the suspended board of the CD is directed to cooperate with the IRP and to provide all assistance to him to complete the CIRP In time - auditors are hereby directed to complete the transaction audit immediately, preferably within two weeks from the date of receipt of this order by way of email. RP is directed to serve a copy to the auditors on receipt of the order by him.
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2020 (9) TMI 1075
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- Reading Section 9 with Section 5(20) and 5(21) of the Code, application under Section 9 of the Code can be filed by a person who has a claim in respect of the provision of goods and services. The application is based on the operational creditor neither receiving payment from the corporate debtor nor notice of dispute under Section 8(2) of the Code. There is no provision in Section 9 of the Code read with Section 5(20) and Section 5(21) of the Code for an application being moved to the Tribunal on the basis of a decree. The decree may be evidence of non-payment or of default but by itself, a decree cannot give rise to and form the basis of an application under Section 9 of the Code. Section 3(10) of the Code gives the definition of creditor but it is only an operational creditor who has the right to file an application for initiating CIRP in the case of the corporate debtor. The submissions made by ISMT Limited cannot therefore, be accepted. Time Limitation - HELD THAT:- The payment by HIM Teknoforge Limited was made conditionally and was subject to acceptance of the outstanding amount payable being only ₹ 7,31,813/-. This condition was not accepted by ISMT Limited which filed an application under Section 9 of the Code for the amount of ₹ 83,12,760.91 with interest. The conditional payment cannot therefore, have the effect of being an acknowledgment of the debt claimed of ₹ 83,12,760.91. Moreover, even if it is presumed to be an acknowledgment of debt, it is beyond the period of three years from the date on which the debt became due and therefore, a fresh period of limitation is not available - plea of the learned senior counsel for HIM Teknoforge Limited that the present petition is not filed within the limitation period is accepted. The application under Section 9 of the Code is therefore, rejected on the ground that it is barred by limitation and alternatively, on the ground that notice of dispute was received by the operational creditor - Application disposed off.
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2020 (9) TMI 1074
Maintainability of application - initiation of CIRP - core issue is the alleged default of the Corporate Debtor in not finally granting the Performance Shares to the Petitioner - HELD THAT:- The conditions as laid out in the Rules for the final grant and conveyance of such shares would indicate whether any right or claim arose in the hands of the Petitioner/Operational Creditor with regard to such Performance Shares. The Rules of the Performance Share Plan , a copy of which has been placed on record, shows that Essilor International had adopted the Rules regarding Performance Shares on 02.12.2015, as authorised by the EGM held on 05.05.2015, for the benefit of its Non-French employees and executive officers, in which they could participate, being a part of the Group. However, any grant of the same was at the discretion of Essilor Luxxotica, as the Company is presently called, and these are applicable to the entire Group, including employees of Essilor India. Broadly speaking, Performance Shares are granted free of cost, and are in the nature of incentives to retain employees, in lieu of their loyalty and to strengthen the Company brand, by linking them to future payment, subject to various conditions. Their legal framework is governed by the provisions of the French Commercial Code relating to free share grants. Some of the important clauses of the Performance Plan, for our purpose, and for our summary examination, are Clauses III, IV and V. Clause III deals with the Vesting Period . The process starts with a meeting of the Board of Directors for making a conditional grant of Performance Shares to certain employees. This is the Grant Date . This also defines the Initial Reference Price and the Average Price, which are required for assessing the Performance Condition subsequently. This clause also stipulates the conditions under which shares are delivered to the allotee on the Final Delivery Date . Prior to this final delivery date there is a vesting period starting with the Grant Date and ending with the Final as a Delivery Date, which may be the 4th anniversary of the Grant Date or the Performance Achievement of the Date; or the sixth anniversary of the Grant Date, which ever happens first. Hence, until the vesting period ends as above, it is apparent that there is no right to or ownership conferred upon the Employee vis a vis the Performance Shares. Coming to the facts of the Petitioner's case, it is seen that Performance Shares were awarded to the Petitioner on 02.12.2015, 22.09.2016 and 03.10.2017. As per Clause III of the Rules, the Vesting Period in the case of the Petitioner would have ended on, and he would have become eligible for finally earning the Performance Shares in four years, i.e. in the years 2019, 2020 and 2021 respectively. The conditions required to be fulfilled were two, namely the Presence Condition of the employee and the Performance condition of the shares. But he was admittedly not an employee in the Respondent/Corporate Debtor Company in 2019, having finally left the Company on 31.12.2018 after availing Garden Leave subsequent to acceptance of his resignation on 21.09.2018. Thus, as per Clause IV the Petitioner beneficiary had seized to hold any employee or corporate officer position whatsoever within the Essilor Group, to whom these Rules applied, and hence he had forfeited his right to the final earning of the Performance Shares or to any indemnity therefor - Such date of forfeiture of the right to a definitive grant of the Performance Shares was the date of the definitive cessation of all employee or corporate officer functions, i.e. 31.12.2018 in the case of the Petitioner. It becomes clear on the face of the available facts and the Rules governing Performance Shares, as mentioned above, that the Presence Condition referred to in Clause IV was not met and the Petitioner was ineligible for the same - the Petitioner cannot take the plea that he had retired in the normal course at the age of 58 years and was eligible for the Performance Shares by virtue of the Exception to Clause IV, being unaware of the extension letter. It is also seen from the Notice dated 27.07.2016 that it was circulated to all Regional and Branch Offices, all Notice Boards and All Employees. No material has been brought on record by the Petitioner to establish that the said Notice was fake, non-existent, an afterthought or issued only in his case to deny him the benefits claimed. The Petitioner was not eligible for the Performance Shares, going by the plain facts of the case, and hence there was no debt or default on the part of the Respondent/Corporate Debtor. However, while the summary proceedings under the Code lead us to this conclusion, and there are disputes raised by the Petitioner that cannot be investigated here, we may add that this order will not take away the rights of the Petitioner to pursue the same under any other law or forum, if permissible - Petition dismissed.
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2020 (9) TMI 1073
Direction for change of IRP in respect of M/s. Inter Labs (India) Private Limited / Corporate Debtor - exclusion of time from 22.08.2017 till date of appointment of IRP from the CIRP period - HELD THAT:- The Adjudicating Authority can exclude a certain period for the purpose of counting total period of CIRP, if circumstances justify such exclusion. Here is the case, where considerable time of more than two years have been lost due to reasons stated aforesaid. We are of the considered view that since admission order has been restored to the file of this Tribunal by the Hon'ble Supreme Court, the CIRP to start afresh from today. The Corporate Insolvency Resolution Process to start afresh from today i.e. 25.02.2020. That the public announcement of the initiation of Corporate Insolvency Resolution Process shall be made immediately as prescribed under section 13 of Insolvency and Bankruptcy Code, 2016 - Application allowed.
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2020 (9) TMI 1072
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- For an application filed U/s 7 of the Code, the parameters/requisite conditions to be considered by the Adjudicating Authority is whether the default is committed for the debt or not, and whether the Application is filed in accordance with law by suggesting suitable IRP or not. There is no dispute with regard to sanction of loans in question by the Bank. Moreover, it is not the case of Respondent that the Loans in question were not sanctioned and has committed its defaults. Payment of some part of instalments of loan, not accepting its proposal of settlement by the Bank etc. are not tenable grounds in a Petition filed U/s 7 of Code. And requesting the Bank for settlement of claim in question itself show that the Debt in question is established and default of Account of Respondent is not in dispute - Petition admitted - moratorium declared.
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2020 (9) TMI 1071
Additional time period of 75 days sought for completion of the CIRP - permission to CoC members, who abstained from voting to submit their vote on approval of the resolution plan or liquidation of the corporate debtor - HELD THAT:- The Code has provided certain timelines for completion of the CIRP with a specific object and purpose. The Hon'ble Apex Court in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] held that 330 days is not mandatory and in exceptional cases, and where the circumstances warrant, the same can be extended for a further reasonable period. But in the instant case, one of the CoC member, i.e. SBI when this Adjudicating Authority specifically provided opportunity to consider the resolution plan of Maritime Trade Corporation by extending time and by issuing certain specific directions, having failed to act and having allowed to lapse the maximum period provided under the Code, now through the resolution professional seeking extension of further time and also for issuance of further directions for convening of the meeting of the CoC for consideration of the resolution for approval of the resolution plan of the Maritime Trade Corporation. Let the resolution professional take out the notice to State Bank of India and serve the same and file affidavit of service accordingly. State Bank of India shall file an affidavit explaining the day-to-day delay from 15.11.2019 on which date, the last CoC meeting was held under the orders of this Adjudicating Authority, to till date and also to explain why exemplary costs are not imposed on it for its aforesaid conduct. List the instant CA on 06.03.2020.
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2020 (9) TMI 1070
CIRP Process - validity of the order of the Presiding Officer under the Payment of Wages Act, 1936 - Scope of Section 238 of the IBC, 2016 - moratorium was declared u/s 14 - violation of provisions of Section 14 as well as Section 238 of IBC, 2016 - HELD THAT:- The Hon'ble Supreme Court has clearly held in the case of Alchemist Asset Reconstruction Company Ltd. Vs. M/s. Hotel Gaudavan Pvt. Ltd. [ 2017 (12) TMI 1107 - SUPREME COURT ] held that the steps that have to be taken under the Insolvency Code will continue unimpeded by any order of any other Court - The ratio decidendi of the Hon'ble Supreme Court is binding on all subordinate authorities of the State vide Articles 141 144 of the Constitution of India. The order passed by the Presiding Officer under the Payment of Wages Act, 1936, is still-born and a nullity in law and cannot stand in view of the foregoing narrative and the provisions of law as enunciated in this order and consequently stands invalidated - A copy of this order may be served on the Presiding Officer so as to take note of this Tribunal's order and to refrain from acting against the interest of justice. Application allowed.
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Service Tax
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2020 (9) TMI 1069
Rejection of SVLDR scheme - Section 125 (1) (e) of the Finance Act, 2019 - contention of the respondents is that the petitioner has filed the declarations after being subjected to an enquiry/ investigation/audit and hence he is not eligible to make declarations and avail the benefits of the Scheme - HELD THAT:- The SVLDR Scheme has been introduced by the Government of India as an endeavour to unload the baggage relating to the legacy taxes that have been subsumed under GST and allow business to make a new beginning and focus on GST. Dispute Resolution and Amnesty are the two components of the SVLDR Scheme. The Dispute Resolution component is aimed at liquidating the legacy cases locked up in litigation at various forums, whereas the Amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability to pay the tax dues. The Scheme is incorporated in chapter V of the Finance Act, 2019. Paragraph 10(b) of Ext.P19 circular dated 27.08.2019 issued by the Government of India, Central Board of Taxes and Customs, would show that the Scheme is not available to an applicant who has been issued a show cause notice relating to refund or erroneous refund. It has potential to lead to an interpretation that such persons will not be able to opt for the Scheme for any other dispute as well, since the restriction is on the person in place of the case - As per the Scheme, as clarified in Ext.P19 circular, if a person has been issued a show cause notice and at the same time he also has other outstanding disputes which are covered under the Scheme, then he will be eligible to file declaration for other cases. Therefore, it is clear that any investigation pertaining to the period from 2014 to 2016 by the authorities should not affect the declarations made by the petitioner in respect of the period from April, 2016 onwards. The contention of the respondents is that the investigation pertains to the period 2016 17 also and the respondents are yet to quantify and communicate the amount due. The respondents are directed to consider Exts. P15 to P17 declarations made by the petitioner under the SVLDR scheme 2019. Ext.P18 letter dated 16.12. 2019 of the Joint Commissioner is set aside. The respondents are directed to place the afore declarations made by the petitioner before the Designated Committee. The Designated Committee is directed to decide the petitioner s applications/declarations after giving an opportunity of hearing to the petitioner - Petition disposed off.
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CST, VAT & Sales Tax
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2020 (9) TMI 1068
Input Tax Credit - validity of default notices of assessment of tax, interest and penalty - Section 9(2)(g) of the Delhi Value Added Tax Act, 2004 - HELD THAT:- The impugned order dated 25th June, 2020 passed by the OHA is set aside and the matter is remanded back to the OHA. The OHA is directed to decide the matter within twelve weeks. All the rights and contentions of the parties are left open. Petition disposed off.
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Indian Laws
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2020 (9) TMI 1067
Reduction in the sentence awarded - Smuggling - truck was carrying illicit drugs - offences punishable under Sections 21(c) and 25 of the NDPS Act - HELD THAT:- This Court is of the view that there are certain mitigating circumstances which are required to be considered. The petitioner was the only male member of his family, which comprises of his widowed mother, his wife a daughter. It is also relevant to note that the appellant is not involved in any other case and has no criminal antecedents - It is also material to note that in BALWINDER SINGH VERSUS ASSTT. COMMISSIONER, CUSTOMS CENTRAL EXCISE [ 2005 (2) TMI 127 - SUPREME COURT] , 175 Kgs of Heroin and 39 Kgs of Opium of foreign origin was recovered from the petitioner. However, the Court noted that the petitioner was convicted of this offence for the first time and considering the facts and circumstances reduced the sentence awarded. The appellant has been in custody since 04.02.2010 and has served more than ten years and six months of his prison sentence. His conduct in jail is also reportedly satisfactory. Considering the above, the sentence awarded to the appellant is reduced from twelve years rigorous imprisonment to the sentence already served. The appellant shall pay the fine of ₹1,00,000/- as imposed and in default of which shall serve simple imprisonment for a further period of three months instead of one year as directed by the impugned order dated 29.03.2016. Appeal allowed in part.
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2020 (9) TMI 1066
Dishonor of Cheque - On behalf of respondent no. 2, it is argued that the petitioner does not deserve judicial discretion in her favour because despite Court's order in all the three cases, she did neither pay the amount of fine, nor did she pay compensation to the respondent no. 2, who is an old person of 65 years of age - HELD THAT:- Sentencing is an area which troubles the Court more than the trial itself. The balance is always made between the conflicting interests. It is this area in which there is large discretion given to the Judges. The purpose of sentencing need not be reiterated. The person who has incurred loss due to offence is also required to be compensated and it is perhaps because of this reason, that in all the three cases, the petitioner was required to pay compensation to respondent no. 2, but, she did not pay even a part of it. This is not a small amount. In some cases, the amount of compensation is 6,70,000/-. This Court is of the view that since the petitioner has not paid even a part of the compensation, as directed by the Court, she does not deserve any judicial discretion for permitting the sentences imposed upon her to run concurrently and accordingly, this Court is of the view that the learned Court below on different premises, but, rightly rejected the application filed under Section 427 of the Code - Petition dismissed.
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2020 (9) TMI 1065
Maintainability of petition - Rejection of application for summoning the employee of the respondent-bank - denial of fair trial - Section 311 of the CrPC. - HELD THAT:- In the present case, it is apparent from the record that the petitioner had not established that for which purpose he wanted to summon the employee of the respondent-Bank. It had also not been stated by the petitioner that which bank document he wanted to summon. The petitioner had also not established the essentiality of the respondent-bank employee and document to be summoned to prove his defence. Therefore, the trial Court has rightly rejected the application of the applicant lacking the reasonable cause for calling the witness as well as documents. Petition dismissed.
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2020 (9) TMI 1064
Dishonor of Cheque - validity of summoning order - HELD THAT:- The law regarding sufficiency of material which may justify the summoning of accused and also the court's decision to proceed against him in a given case is well settled. The court has to eschew itself from embarking upon a roving enquiry into the last details of the case. It is also not advisable to adjudge whether the case shall ultimately end in conviction or not. Only a prima facie satisfaction of the court about the existence of sufficient ground to proceed in the matter is required. The submissions made by the applicant's counsel call for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in this case. This Court does not deem it proper, and therefore cannot be persuaded to have a pre-trial before the actual trial begins. A threadbare discussion of various facts and circumstances, as they emerge from the allegations made against the accused, is being purposely avoided by the Court for the reason, lest the same might cause any prejudice to either side during trial. As requested by the counsel, it is directed that the accused may appear before the court below within a period of one month from today through the representing counsel and move an application seeking compounding of offence through compromise. On such application being moved the concerned court may take adequate steps in accordance with law in this regard and shall provide further opportunity to the accused which shall not exceed a maximum period of four months from today to make an endeavour in this direction - In the aforesaid period of five months or till the decision given in the light of the application, whichever is earlier, no coercive measures shall be adopted against the accused. Application disposed off.
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2020 (9) TMI 1063
Condonation of delay in filing appeal - Dishonor of Cheque - time limitation prescribed under Section 142 of the N.I. Act - power of Magistrate to condone the delay - HELD THAT:- As is well-known Section 138 of the N.I. Act lays down that timelines for issuing notice of repayment and if no such repayment is made for filing complaint before the Magistrate when a cheque upon its presentation has been dishonoured - What emerges from the said provision is that the Magistrate would not take cognizance of a complaint which is not made within one month of the date on which the cause of action in terms of Clause (c) of the proviso to Section 138 has arisen but the Magistrate has the discretion to take cognizance even beyond such period, provided the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. The provisions of Section 142 of the N.I. Act are akin to Section 473 of the Criminal Procedure Code which while providing for limitation for taking cognizance of certain offences, saves the power of the Court upon being satisfied of the sufficient cause for taking cognizance beyond the period of limitation. Impugned order set aside - petition allowed.
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2020 (9) TMI 1062
Dishonor of Cheque - invocation of revisionary jurisdiction under Section 397 read with Section 401 of the Code of Criminal Procedure - HELD THAT:- The continuation of these proceedings will not suffice any fruitful purpose whatsoever. Therefore, I am of the considered opinion that in view of the compromise, this is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, should be invoked to compound the offence and consequently to quash the consequent proceedings. The learned trial Court shall release all the amount in the manner discussed here-in-above on the production of certified copy of this judgment by respondent. In view of the above statement of the learned counsel for the petitioner, the respondent/complainant is entitled to receive the compensation amount of ₹ 3,34,000/-. In case, the compensation amount is deposited with the Trial Court or put in the Fixed Deposit, then all the interest accrued, thereupon shall also be given to the complainant. However, if there is short fall in deposit of compensation then such short fall shall be met with by the convict/petitioner on or before 31.3.2020. It is made clear that the interest, if any, accrued upon the fixed deposit shall not be treated towards compensation and total compensation amount shall have to be deposited by the convict/petitioner - the petitioner/convict shall deposit 15% of the cheque amount before the H.P. State Legal Services Authority, Shimla. The compensation awarded is ₹ 3,34,000/- therefore, 15% of the same comes to ₹ 50,100/-. Criminal Revision is disposed of.
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2020 (9) TMI 1061
Dishonor of Cheque - Validity of summon order - HELD THAT:- The submissions made by the learned counsel for applicant call for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in this case. This Court does not deem it proper, and therefore cannot be persuaded to have a pre-trial before the actual trial begins - there are no justification to quash the complaint or the summoning order or the proceedings against the applicants arising out of them as the case does not fall in any of the categories recognized by the Apex Court which may justify their quashing - prayer for quashing the same is refused as there are no abuse of the Court's process either. As requested by the counsel, it is directed that the accused may appear before the court below within a period of one month from today through the representing counsel and move an application seeking compounding of offence through compromise. On such application being moved the concerned court may take adequate steps in accordance with law in this regard and shall provide further opportunity to the accused which shall not exceed a maximum period of four months from today to make an endeavour in this direction. Thereafter, the court shall pass necessary orders within a period of five months from today. Application disposed off.
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