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2021 (11) TMI 923
Prior pried Expense adjustment - HELD THAT:- As observed from the orders of authorities below that the assessee did not filed any details before the AO, while the assessee has filed additional evidences before ld. CIT(A) for the first time to support its stand. It is observed that ld. CIT(A) did not call for remand report/comments from AO on these additional evidences which is in breach of Rule 46A of the 1962 Rules. Further, the ld. CIT(A) has passed a non speaking cryptic order without offering reasons/comments for not allowing the claim of the assessee on each and every item of expenses claimed by assessee as 'Prior Period Expenses'. In our considered view based on facts and circumstances of the case, that the matter needs to be set aside and restored to the file of Assessing Officer for de-novo adjudication of the entire issue on merits in accordance with law. The assessee is directed to produce all relevant evidences/details/explanation before the Assessing Officer in set aside de-novo proceedings - ground of appeal is allowed for statistical purposes.
Addition of difference in the Opening Stock in Current Year with that of Closing Stock of the immediately preceding year - AO observed from the record that there is a difference in Opening Stock in Current Year with that of the Closing Stock of the immediately preceding year - CIT(A) rejected the contentions of the assessee by upholding the additions to income made in the assessment order passed by Assessing Officer - HELD THAT:- As observed that there is no difference between the closing stock of the preceding year with the opening stock of the current year, which was ₹ 150.12 lacs - DR has also fairly and correctly submitted that there is no difference in closing stock of preceding year with the opening stock of current year and the issue is to be decided in favour of the assessee. We have observed that as on 31.03.2011, the closing stock was ₹ 150.12 lacs and the opening stock as on 01.04.2011 was also ₹ 150.12 lacs. There is no difference at all between the closing stock in the preceding year and the opening stock in the current year, rather the AO adopted wrong figures of closing stock of current year with that of the increase/decrease in the stock of finished goods. CIT(A) passed cryptic order and did not elaborate on facts correctly. Thus, the authorities below erred in making addition. Thus, based on facts and circumstances of the case, the addition as made by authorities below is not sustainable in the eyes of law and is hereby ordered to be deleted.
Allowability of set off of brought forward business losses and unabsorbed depreciation - HELD THAT:- All the earlier year brought forwards business losses which assessee is seeking to set off and carry forward, should be assessed business losses and the return of income for those years ought to have been filed by the assessee within the time stipulated u/s. 139(1) and ought not to be belated return of income filed beyond the due date prescribed u/s. 139(1), otherwise it will be hit by provision of Section 80 and 139(3)
So far as quantum of brought forward business losses and unabsorbed depreciation which were assessed to be carried forward to subsequent years and its period of allowability is concerned, we are of the considered view that these facts requires verification by Assessing Officer from the record, and the material on record available before us is not sufficient to give conclusive finding on these facts, and hence we are setting aside this matter to the file of AO for verification of facts and quantum of allowability of brought forward business losses and unabsorbed depreciation, and while allowing the carry forward of business losses, the AO shall also verify that the return of income was filed by assessee in time within due date prescribed u/s. 139(1) for those years and the loss assessed by Revenue to be carried forward for each of the years and period of allowability of business loss for eight assessment years as is available u/s. 72(3) of the 1961 Act. The assessee has also grievance that unabsorbed deprecation amount is wrongly mentioned in grounds of appeal filed with tribunal, this aspect shall also be verified by the AO from records and correct amount be accordingly considered after due verification of records.
Depreciation @ 30% of total depreciation claimed on account of unverifiable fixed assets of closed unit at Allahabad and failure to establish usage of these assets for business purposes as is required u/s. 32 - HELD THAT:- The contentions of the assessee that Building and Motor vehicles at Allahabad Manufacturing unit were used for business purposes, building for the purposes of Registered office and Motor Vehicle for the purposes of official usage by Directors, the facts on record are not sufficient to come to conclusive finding that these assets were actually used by assessee and further that these assets were wholly and exclusively for the business of the assessee company to satisfy the mandate of Section 32 and 38(2) of the 1961 Act. Further, contention of the assessee that it only claimed depreciation on Building and Motor Vehicle of Allahabad unit and no depreciation was claimed with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, again the facts on record are not sufficient to give conclusive finding on this issue, in the absence of details/break-up furnished by the assessee. The assessee is also aggrieved that figure adopted by AO for disallowance of depreciation is not correct. Keeping in view totality of facts and circumstances of the case, we are of the considered view that the assessee will not be entitled for claiming depreciation on the closed Manufacturing unit at Allahabad, but, however, for verification and adjudication of other claims of the assessee as detailed by us in this order, such as user of building and Motor Vehicles of Allahabad Manufacturing unit for business purposes, that no depreciation was claimed in return of income filed with Revenue with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, adoption of the correct amount of disallowance of depreciation, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law.
Disallowance of Rebate Expenses claimed by the assessee as deduction while computing income chargeable to tax under the head 'Profits and Gains from Business or Profession' - authorities below held that no income-tax was deducted at source by assessee u/s. 194H and the same is not allowable as deduction while computing income chargeable to tax - HELD THAT:- The assessee has merely submitted credit notes, and no further details as to contract/agreement with parties, claim(s) raised by parties and evidences to substantiate the claims are bonafide and genuine etc., are furnished by assessee - material on record, is not sufficient to give conclusive finding that these rebate allowed were actually towards breakage or rate difference, and not commission. This requires verifications and evaluation of evidences to come to conclusive finding, firstly that these are business expenses which are incurred wholly and exclusively for business of the assessee and are genuine claims. Further, if the said expenses are within ambit of deduction of income-tax at source, then due income tax was deducted at source and paid to the credit of Central Government within the stipulated time, as is required for claiming deduction under the provisions of Section 40(a)(ia) of the 1961 Act. Thus, keeping in view, totality of facts and circumstances of the case, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidences/explanations submitted by assessee in its defense shall be admitted by AO, and adjudicated by AO on merits in accordance with law.
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2021 (11) TMI 922
Revision u/s 263 by CIT - Addition on provision of section 41(1) - excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD - HELD THAT:- As during the impugned year assessee was engaged in the process of recovery of loans and interest which was granted earlier and no fresh lending was done in the impugned year. Thus, in the impugned year when the excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD from Som Distilleries Limited, the same was deducted from the net profit as per the audited financial statements in computing income under the head profit and gains from business or profession - no benefit claimed by the assessee in terms of section 41(1) of the Act in respect of the impugned amount. It is also evident that there is no tax advantage derived by the assessee in respect of the impugned amount. It is worth noting that provisions of section 41(1) are attracted only when any allowance or deduction has been claimed in respect of loss, expenditure or trading liability and the assessee has obtained in cash or in any other manner any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof. We find that Ld. Pr.CIT has grossly erred in applying the provisions of section 41(1) in the present case which in no situation is applicable in the facts of the present case.
We find that during the course of the assessment proceeding, the Ld. AO specifically asked Vide questionnaire issued on 17.04.2017, to explain large any other deduction claimed in sch. BP creating a loss without any income in Profit & Loss Account and explain mismatch between income/receipt credited to Profit & Loss Account considered under other heads of income and income from heads of income other than business/profession, which was replied.
AO conducted proper enquiry to verify the withdrawal of provision of ICD and allowed the claim on being satisfied with the details and explanation. Thus, the decision of ld. AO cannot be held to be erroneous. We find that the ld. AO has applied his mind while conducting the assessment proceedings. Under these circumstances, where a detailed enquiry has been conducted on particular issue and the Ld. AO has made proper application of mind on the details filed by the assessee and have conducted sufficient enquiry the assessment order cannot be held to be erroneous so far as prejudicial to the interest of revenue. We accordingly quash the impugned revisionary order framed u/s 263 of the Act and restore the assessment order u/s 143(3) - Decided against revenue.
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2021 (11) TMI 921
Addition u/s 14A r.w.r. 8D - Mandation of recording satisfaction - whether or not the A.O had validly assumed jurisdiction and worked out the disallowance u/s 14A r.w Rule 8D? - claim of the assessee before us that the A.O without recording his dissatisfaction as regards the claim of the assessee that no expenditure was incurred for earning of the exempt dividend income had in a mechanical manner dislodged the same and worked out the disallowance u/s 14A r.w. Rule 8D - HELD THAT:- It is a matter of fact borne from the record that the A.O had merely on the basis of his general observations, viz. that investment decisions are very complex in nature and require substantial market research, day-to-day analysis of market trends and decisions with regard to acquisition, retention and sale of shares at the most appropriate time etc., had dislodged the claim of the assessee that no part of the expenses claimed by him in respect of his other non-exempt income could be attributed or related to earning of the exempt dividend income. The failure on the part of the A.O to strictly comply with the aforesaid statutory obligation that was cast upon him, can safely be gathered from the fact that there is no clear finding by him with reference to the assessee’s accounts as to how the other expenditure claimed by the assessee in respect of its non-exempt income were related to its exempt income.
A simpliciter rejection by the A.O of the aforesaid claim of the assessee which is only backed by his general observations, surmises and conjectures can by no means justify the validity of the jurisdiction assumed by him for computing the disallowance u/s 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. We, thus, not finding favor with the view taken by the CIT(A) who had upheld the validity of the jurisdiction assumed by the A.O for computing the disallowance u/s 14A r.w Rule 8D(2)(iii) set-aside his order.Accordingly, the disallowance made by the A.O u/s 14A r.w Rule 8D is vacated - Decided in favour of assessee.
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2021 (11) TMI 920
Validity of search action initiated - receipt of search warrant - HELD THAT:- Section 132(1) of the Act clearly stipulates issuance of search warrant against whom the search was conducted in accordance with law. In the present case, the search was conducted in the premises of the assessee company which is duly admitted by the Managing Director of the company at the time of recording of her statement. Further from the paper book, we also found that the Managing Director of the company during the appellate proceedings filed an affidavit and in the affidavit he had stated that she is the Managing Director of the Company and the diary was found belonging to the assessee company.
the search warrant was clearly issued against the assessee company and, therefore, the action on the part of the revenue to initiate the search proceedings against the assessee company was in accordance with law. In our view, the ld. CIT(A) has rightly relied upon the decision of Hon’ble Delhi High Court in the matter of MDLR Resorts Pvt. Ltd [2013 (12) TMI 1116 - DELHI HIGH COURT] and therefore, we do not find any error in the order of CIT(A).
Search warrant was required to be received by Smt.Radha S. Timblo in her individual capacity as well as in the capacity of Managing Director and only one signature appears on the search warrant - We are of the opinion that in the Companies Act and also in the Income Tax Act, the Managing Director of the company is an authorised officer to file the proceeding for and on behalf of the company and is also entitled to receive the document on behalf of the company. Admittedly, in her statement, Smt. Radha S. Timblo has categorically mentioned that she is making statement in her individual capacity and being the Managing Director of M/s Timblo Pvt. Ltd.. Once the Managing Director of the company says that the search was carried out in the premises of the company, therefore, it is not option for the assessee to take diametrically opposite stand stating that no search was carried out in the premises of the assessee company. With the above observations, we found that the legal ground raised by the assessee in all the appeals is not maintainable. Accordingly, we dismiss all the appeals of the assessee.
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2021 (11) TMI 919
Reopening of assessment u/s 147 - addition u/s 68 - Validity of two separate assessment orders by two different A.Os. for the same assessee for the same assessment year - HELD THAT:- It is a peculiar case of reopening of the assessment on account of cash deposit in the bank account by two different Assessing Officers for the same assessee for the same assessment year
Once the A.O. has already made an assessment in the order under section 147/143(3) in the case of the assessee for the same assessment year for the reason that assessee has made cash deposit of ₹ 15,02,250/- in his bank account, therefore, in my opinion it is not permissible by another A.O. to reopen the assessment on the very same issue and pass the order under section 147/144 of the I.T. Act, 1961. When the PAN was available with the Department and an order had already been passed under section 147/143(3) for the same assessment year for the same reason, therefore, the second order passed by the A.O. dated 07.12.2017 in my opinion does not stand in the eyes of Law unless and until the first order is withdrawn. In this view of the matter, I am of the considered opinion that the second order passed by the ITO, Ward-32(2) in the instant case does not survive since there cannot be two different assessment orders for the same assessee for the same assessment year with the same PAN by two different A.Os. The grounds raised by the assessee are accordingly allowed.
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2021 (11) TMI 918
Correct head of income - income arising out of shares - business income or income from capital gains - HELD THAT:- In this case the assessee has purchased shares of Induslnd Bank on 18.12.2009 and sold the same on 23.03.2011. The holding period of the shares is more than 12 months and only single activity carried by the assessee. In the balance sheet also it has shown as an investment. In view of the above facts, we are of the opinion that the activity carried by the assessee cannot be treated as a business activity.
As laid down in the CBDT circular No. 4/2007, the substantial nature of transactions and the manner of maintaining books of accounts plays an important role in determining the nature of transaction. Also, as depicted by the Circular No. 06/2016, in the present case, the appellant has treated the shares as investment and not as stock-in-trade and there are no fine grounds to say that the appellant is a dealer in shares and not an investor especially when the sale of shares was a single solitary transaction - Decided against revenue.
Disallowance u/s. 14A - assessee has disallowed an amount suo-moto as expenses attributable to the earning of the exempt dividend income - HELD THAT:- We find that the Ld. CIT(A) only directed the A.O. to verify entire investments and exclude investments which has no exempt income yielded and direct the A.O. to re-compute disallowance of Rule 8D(2)(iii) of the Rules r/w s. 14A of the Act. Hence, we find no infirmity in the order passed by the Ld. CIT(A).
Disallowance of Board meeting expenditure - assessee has conducted a Board meeting at Chennai on various dates and has incurred the above expenditure towards travelling, boarding, lodging, credit card expenditure AND that the assessee's registered office is situated in Delhi, there is no purpose of holding the Board meeting in Chennai - CIT-A deleted the addition - HELD THAT:- We find that when the assessee is having subsidiary and associated offices in Chennai and some of the Directors are staying at Chennai, it is a business convenience of the assessee to conduct the Board meeting. The A.O. cannot decide where the assessee has to conduct the Board meeting. In view of the above, we are of the opinion that the Ld. CIT(A) rightly deleted the addition.
Disallowance of car hire charges - case of the A.O. is that the assessee has taken a Honda Civic car on rent which is registered in Chennai and the assessee is having no business connection in Chennai therefore, the above expenditure incurred by the assessee is not a business purpose it is only personal purpose - HELD THAT:- We find that when the assessee is having a subsidiary companies in Chennai and some of the Directors are residing at Chennai and the assessee has hired a car for his Directors for the purpose of business, it cannot be said that it is a personal in nature therefore, the Ld. CIT(A) rightly deleted the addition made by the A.O. By considering the above order passed by the Ld. CIT(A), we find no infirmity in the order passed by the Ld. CIT(A).
Revenue appeal dismissed.
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2021 (11) TMI 917
Condonation of delay in filing an appeal - delay of 10 years - sufficient cause to condone the delay explained or not? - HELD THAT:- Assessee knows that there are proceedings pending before the A.O. for which he has appeared already along with his C.A. and also other assessment years pending before the A.O - we are of the view that the assessee knowingly not to choose file an appeal in time before the Ld. CIT(A). Apart from that the assessee filed an affidavit before the ITAT, wherein he has stated in paragraph-I that he is away from family since 11.07.2001, which is factually not correct because the assessee has appeared before the A.O. on 19.03.2003, 18.10.2004, 26.02.2004 therefore, the plea of the assessee that he is away from the family cannot be accepted.
As per the remand report submitted by the A.O. that the assessee suffering from sugar, joint pain since 20.01.2002 for that he is taking treatment from Dr. Muralidharan, BAMS and the assessee is visiting the hospital for the period from 20.01.2002 to 28.08.2010 as an outpatient. From the above, it is clear that his state of mind is perfect and he is taking treatment for his ill-health therefore, he must also aware that there was an assessment order and appeal also to be filed. After careful reading of the remand report and also detailed order of the Ld. CIT(A), we find that the assessee was away from the family for 10 years is not believable. For the condonation of the delay, the assessee has to show that there must be a sufficient cause to condone the delay. In this case, the assessee himself decided as per his affidavit not to go to his house knowingly that there must be an assessment order. No one is prevented the assessee to go to his house therefore, we are of the opinion that there is no sufficient cause to condone delay. Accordingly, the appeals filed by the assessee are dismissed.
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2021 (11) TMI 916
Understatement of sales - search and seizer operation were carried wherein the certain loose papers were found and seized - second round of appeal before tribunal - CIT-A deleted the addition - HELD THAT:- AO made addition only by making the arbitrary calculation on the basis of above loose papers without bringing any positive, corroborative evidence on records in support he has proceeded on his own imagination, assumptions, presumptions or guess work - when the Assessing officer himself recorded the statements of Marketing manager Sh. Ankit Jain who was handling the sales was recorded on 21/10/2010 U/s 131 wherein he has clearly explained and stated about the size of flats are 1001 sq ft.(built up area) and 1126 sq ft. (built up area) only. He also explained about the size of flats mentioned in the broacher i.e. 1666 and 1484 sq ft. that this was nothing but super built up area of both type of flats constructed by the Company. Regarding charging of rates by the assessee Company from the customer in question No.5 he has clearly stated the facts that the rates per sq ft are charged on built up area only
In all the agreements the built area as well as total sale consideration has been mentioned clearly. When all these explanation, documents were before the AO, he must bring on record any contrary evidence, he must have made the inquiry from the purchasers when the data or details of the purchasers were before him, before making the addition on account of understatement of sales. The Assessing Officer has not brought on record any contrary evidence except these loose papers.
The Notarized sales agreements cannot be discarded in front of loose rough estimated papers without bringing any contrary evidences to rebut the same. On this preposition, we draw strength from the decision of the Hon’ble MP High court in the case of CIT v/s Dolphin Builders (P) Ltd . [2013 (6) TMI 103 - MADHYA PRADESH HIGH COURT] wherein it was held that “Department had not examined any purchaser or flat owner to verify correctness of noting that some higher amount was paid by said purchaser to “B” Builders or fact that actual price was much higher to price which was recorded in account books. The Tribunal had also found that if any amount was collected in excess to the agreed price then “B” could have been liable for that and not the assessee. Aforesaid reasoning of the Tribunal was reasonable. Though there might be some doubt about the price of the flats but until and unless it could have been proved by some evidence, aforesaid doubt could not take place of proof. Until and unless such noting was corroborated by some material evidence, the AO erred in making addition in the income.
AO made the addition own guess work, assumption, presumption and suspicion by using rough estimated cutting noting which were prior to the A.Y.’s under consideration which was not desirable in the eye of law. Hence also no were liable to be made. CIT-DR has not brought on record any new facts or circumstances to controvert the findings so recorded by the ld. CIT(A) qua this issue, therefore, considering all, we do not see any reason to interfere to deviate from the findings so recorded by the ld. CIT(A) qua this issue, accordingly, we uphold the same. - Decided against revenue.
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2021 (11) TMI 915
Reopening of assessment u/s 147 - Non issuing mandatory notice u/s 143 (2) - validity of Notice by affixture - HELD THAT:- Serving officer could not state in his report the any name and address of the witnesses who have identified the house of the assessee and in whose presence the notice was affixed. Further, the affidavit in assessment records is missing thus in contravention of Rule 20 of Order V of CPC 1908. We find that in case of Jagannath Prasad [1976 (9) TMI 19 - ALLAHABAD HIGH COURT] there was only single attempt by the inspector and the reason enumerated was that door was locked. Thus the findings of above case are squarely applicable in assessee’s case. In view of the above judicial pronouncements, we are of the view that the Notice by affixture needs to be done in accordance with procedure laid down in by Order V, rule 17-20 of CPC
Thus the reassessment proceedings, so initiated, are bad in law as the Assessing Officer failed to serve the notice u/s 143(2) of the I.T. Act on the assessee. Accordingly, we quash the assessment order framed u/s 144 r.w.s. 147 of the IT Act for A.Y.2009-10 - Decided in favour of assessee.
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2021 (11) TMI 914
Validity of assessment - limitation period to issue notice u/s 143(2) - whether the limitation period commences from the date of the actual filing of RoI or rectified RoI. - HELD THAT:- CIT(A) rejected the assessee’s contention and observed that the proviso to section 143(2) allows the AO to issue the notice before the expiry of six months from the end of financial year in which the return is furnished. He interpreted the words “end of financial year in which the return is furnished” to mean that the limitation period given in the Act will extend from the date of actual filing the RoI. He interpreted the provision to mean the limitation period commences from the date of the actual filing of RoI or rectified RoI.
The assessment procedure laid down in the Act are based on the respective financial year and assessment year. The responsibilities of assessee as well as AO are clearly specified in the Act so that the assessment can be completed for the respective AY’s as per the time frame given in section 153(1). The words used in section 153(1) are “any time after expiry of 21months from the end of the AY in which the income was first assessable”.
In case if we accept the proposition of Ld. CIT(A) then there will not be any finality to the assessments selected for scrutiny under CASS or any other method of selection. Itwill defeat themethod specified in the Act. It is irrelevant when the defect is cured by the assessee but what is relevant is the responsibility of the AO to follow the due procedure set out in the Act. It is his duty to issue the notice u/s 143(2) within the prescribed time limit. The Courts have held that once the AO misses the above time frame to issue the notice, the assessment will be bad in law.
With regard to rectification of defect in the RoI filed u/s 139(1) and limitation period to issue notice u/s 143(2) as relying on KUNAL STRUCTURE (INDIA) (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2 (1) (2) [2020 (2) TMI 725 - GUJARAT HIGH COURT] we are inclined to set aside the order passed by the Ld. CIT(A) and the order passed u/s 143(3) is defective and bad in law. Accordingly, grounds raised by the assessee is allowed.
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2021 (11) TMI 913
Seeking a direction to the respondent authorities to process and refund the claim of IGST of the petitioner - HELD THAT:- The Department had taken the necessary initiative to make the refund and the refund could not be effected as because the account provided by the petitioner were not acceptable by the system in the department, we provide that a representative of the petitioner would visit the office of the Customs Division, Dhubri and sort out the matter and the Customs Department may also explore any other alternative means for making the payment of the amount in consultation with the representative of the petitioner.
Interest - HELD THAT:- We are unaware of the amount the Department intends to pay to the petitioner as because the amount sought to be refunded is not disclosed to the petitioner. If at all, any further grievance still remains on the interest aspect, the petitioner is at liberty to approach again.
Petition disposed off.
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2021 (11) TMI 912
Refund of SAD - payment SAD through duty credit scrip is a valid discharge of duty or not - HELD THAT:- It is an undisputed fact on record that the disputed goods imported by the appellants on payment of SAD were sold in the domestic market on discharge of appropriate VAT/Sales Tax amount levied by the respective State Governments. Further, the conditions itemized in the notification dated 14.07.2007 as amended, have been duly complied with by the appellants, as a result, the original authority had sanctioned the refund claim with regard to the SAD amount paid in cash. The base notification dated 17.09.2007 and the amending notification nowhere specified that cash refund should not be considered, in the eventuality, when the same was paid by using the duty credit scrips. Since the legislative intent is to extend the benefit of exemption upon fulfillment of certain conditions, denial of such benefit in absence of any express provisions in the statute defeats the very purpose of such legislation.
The Hon’ble Delhi High Court in the case of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA & ORS. [2016 (2) TMI 247 - DELHI HIGH COURT], in an identical case, has held that upon fulfillment of the requirements contained in the notification, the benefit of refund should be available to the claimant. It has further been held that the circulars issued by CBEC, imposing additional restrictions for the availment of the benefit of the duty exemption cannot be acted upon inasmuch as an amendment to the notification can only be issued in exercise of the powers contained in Section 25(1) of the Customs Act, 1962 and not otherwise.
There are no merits in the impugned order, insofar as it has rejected the appeal filed by the appellants in denying the refund benefit arising out of the notification dated 14.09.2007, as amended - appeal allowed - decided in favor of appellant.
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2021 (11) TMI 911
Sanction of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 ("The Act") read with the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016 - HELD THAT:- There appears to be no impediment in sanctioning the Scheme, which appears to be fair and reasonable and not contrary to public policy or violative of any provisions of law. All the statutory requirements of Sections 230-232 of the Act appear to have been complied with. Taking into consideration the facts, the Company Petition is allowed and the Scheme annexed with the Petition is hereby sanctioned, with the Appointed date fixed as April 1, 2019. The Petitioner Company-1/Transferor Company be dissolved without winding up.
The scheme is approved - application allowed.
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2021 (11) TMI 910
Validity of Arbitral Award - Seeking stay of proceedings before the NCLT - Section 36(1) of Arbitration and Conciliation Act, 1996 read with Order XXI Rule 11 CPC - HELD THAT:- It is noted that when judgment debtor approached Hon’ble Supreme Court seeking stay of proceedings before the NCLT, it undertook to pay within twelve weeks the amount of ₹ 8.81 crores i.e. the amount claimed by the decree holder in its petition before the NCLT i.e. the awarded amount of ₹ 8,35,33,837/- + interest @ 12% from the date of Award till the date of filing of the petition i.e. 27.05.2019 as ₹ 38,17,382 + ₹ 8,00,000/- towards awarded cost of arbitration proceeding, to the decree holder. However, judgment debtor failed to honour the aforesaid undertaking given before the Hon’ble Supreme Court, the decree holder filed the contempt petition, wherein the Hon’ble Supreme Court vide order dated 07.02.2020 gave last opportunity to the judgment debtor to make the payment of ₹ 8.81 crores within two weeks in compliance of order dated 13.09.2021.
The aforesaid direction of Hon’ble Supreme Court relates to the root of the matter i.e. direction to the judgment debtor to pay the amount claimed by the decree holder before NCLT as on the said date i.e. 27.05.2019, as awarded by the Arbitral Tribunal. The spirit of the said direction is to honour the arbitral Award in its true essence. The arbitral Award is very clearly worded that “the awarded amount of ₹ 8,35,33,837/- has to be paid together with future interest at the rate of 12 percent per annum from 08.01.2019 i.e. the date of the award till date of payment on the awarded amount in favour of decree holder”. So, upon payment of ₹ 8,81,51,219/-crores to the decree holder, the judgment debtor cannot now claim that it has already honoured the arbitral award by complying the directions of Hon’ble Supreme Court vide order dated 07.02.2020.
The judgment debtor is under the obligation to honour the arbitral Award in its true letter and spirit and cannot escape from paying the balance amount of interest due towards it.
The judgment debtor is directed to pay the balance amount of interest, which is due and payable to decree holder from 27.05.2019 with interest @12% p.a. till the date of realization - petition disposed off.
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2021 (11) TMI 909
Oppression and mismanagement - breach and wilful disobedience - Sections 397, 398, 399, 402, 403, 406, 235, 237 and 247 read with Section 111 of the Companies Act, 1956 - HELD THAT:- There is no dispute that the earlier interest @15% was being paid till 30.09.1998 and the above observations only indicate that the payments were earlier made @ 15% but that the observations cannot read to mean that even from 01.04.1999 the Respondents agreed to make the payment @ 15%. The expression ‘at agreed rate’ as contained in paragraph 33 of the judgment of this Tribunal dated 20.08.2019 is capable of interpretation as put by the Respondents. When general body Resolution dated 25.09.1998 have expressly decided to pay interest @ 10% from 01.04.1999 and the general body Resolution is not denied or challenged by the Applicants, their insistence that the unsecured loan was to be paid @ 15% annually even after 01.04.1999 cannot be accepted. It is well settled that it is not permissible to the Court to examine the correctness of the earlier decision which has become final between the parties. However, when an order was reasonably capable of more than one interpretation a proceeding for contempt would not be maintainable.
No case has been made out to punish the Respondents for contempt. The Respondents having themselves initiated proceedings for execution of the judgment dated 20.08.2019 and have expressed their willingness to deposit the entire amount with interest @ 15% till 30.09.1998 and thereafter @ 10% per annum annually compounded till the date payment is made, the Respondents are permitted to deposit the amount as above before the Executing Court within one month from today.
Contempt Application is disposed off.
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2021 (11) TMI 908
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is seen from the records that the Corporate Debtor through its Reply dated 15.02.2020, has admitted its liability to pay to the Operational Creditor. Further the Corporate Debtor Company is in financial crunches hence there is nothing much to say in defense. The Corporate Debtor has no objection for Admission of this present Petition.
On the basis of the evidences on record the Operational Creditor has established that he has delivered services to the Corporate Debtor Company for which an amount of ₹ 5,99,250/- is due and a default has also occurred. Considering these facts and circumstances, the nature of the Debt is an ‘Operational Debt’ as defined under section 5 (21) of the Definitions under The Code. There is a “Default” as defined under section 3 (12) of The Code on the part of the Debtor.
The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices. The Operational Creditor has also suggested the name of proposed Interim Resolution Professional along with his consent letter in Form-2 - Petition admitted - moratorium declared.
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2021 (11) TMI 907
Directions to complete verification of dues to be paid to the Applicants amongst others - HELD THAT:- Learned counsel for the Respondent submitted that the aforesaid documents have already been handed over to the Applicant and that there is no any document left with the Liquidator to handover to the Applicant. It is also stated that this application has been filed as a delaying tactics of the liquidation process.
All the documents sought for and available with the Liquidator have been handed over to the Applicant, nothing remains to be considered in this application. Hence, this application is rejected.
Application dismissed.
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2021 (11) TMI 906
Liquidation of the Corporate Debtor - Section 33(3) and 33(4) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- All necessary directions requiring liquidation of Corporate Debtor has been passed duty - all necessary compliances have been made.
The Corporate Debtor M/s. Palm Lagoon Backwater Resorts Private Limited is hereby put under liquidation with immediate effect under Section 33(1) of IBC, 2016 - application allowed.
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2021 (11) TMI 905
Seeking extension of the term of Joint Managing Director and Managing Director of R-1 Company for a period of three years - HELD THAT:- The observations made by NCLT in para 10 (ii) ‘that the performance of the Gujarat Division cannot be solely attributable to the Gujarat Group, as it was not receiving the required funds and had to go for high cost external borrowings’ read with the observations ‘that the Board did not give adequate attention to the revival of the Gujarat Division and that nothing prevented the Board to formulate the revival plan to put things in Order’, may prejudice the rights of the Appellants in the main Company Petition.
The NCLT has observed that the Board is empowered to take all decisions, the factual matrix of the matter together with the chequered history and also that significant time has lapsed as the main Company Petition No. 428 of 2018 was filed way back on 19.03.2018 alleging Oppression and Mismanagement of the affairs of R-1 Company and further that the main Company Petition is listed for hearing before NCLT in less than 4 weeks time from today, we are of the considered view that in the interest of justice, NCLT shall dispose of the matter as expeditiously as practicable beginning the hearing on 28.10.2021 uninfluenced by the observations made in para 10 (ii) and (iii) of the Impugned Order dated 11.06.2021.
Appeal disposed off.
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2021 (11) TMI 904
Dissolution of Corporate Debtor - Regulation 22(2) of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations 2016 - HELD THAT:- This Bench is of the view that the prayer made by the IRP for dissolution of the Corporate Debtor cannot be accepted since the Liquidation is a pre-requisite to the Dissolution and in the present case, no order of Liquidation has been passed due to absence of any such proposal and non-functioning of the CoC.
Even if the ETO Bahadurgarh has withdrawn its claim, the CoC could have functioned with the Sole Member/Operational Creditor, at whose instance the CIRP was initiated. However, in the present case we notice that even the Sole Member/Operational Creditor of the CoC has been shirking from the responsibility and not pursuing the CIR Process of the Corporate Debtor - As per the Code, if any person [as defined under Section 3(23) of IBC] initiates the Insolvency Resolution Process fraudulently or with malicious intent for any purpose other than for the resolution of the insolvency, or liquidation, such an act is punishable under Section 65(1) of IBC 2016. Hence, before taking any action under Section 65(1) IBC 2016, we think it proper to issue a show cause notice, under Rule 59 of the National Company Law Tribunal Rules 2016, on the Operational Creditor M/s. Om Logistics Ltd. through its Directors as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on it. Ld. Registrar NCLT is directed to issue the show cause notice under Section 65(1) of IBC 2016 read with Rule 59 of the National Company Law Tribunal Rules, 2016 on M/s. Om Logistics Ltd. through its Directors giving them fifteen days' time to explain and submit in writing as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on them.
When the Applicant is unable to carry forward the CIR process for want of cooperation/participation from the sole member of CoC, it is deemed appropriate to terminate the CIR process of the Corporate Debtor - by exercising the jurisdiction under Section 60(5) of IBC 2016 along with inherent power under Rule 11 of the NCLT Rules, 2016, the CIR process of the Corporate Debtor is terminated with immediate effect and release the Corporate Debtor from the rigors of the CIRP and moratorium.
Application allowed.
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