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2023 (12) TMI 1388
Money Laundering - provisional attachment of properties - proceeds of crime - nexus between the alleged schedule offences and the attached property - reasons to believe - complainants availed loans through various instant loan apps that have been charging exorbitant interest rates along with high processing fee and GST charges - HELD THAT:- The contention of the learned counsel for the appellants that M/s Sarvottam Fincap Ltd. was the only NBFC against which there are no allegations regarding involvement of any Fintech Company is devoid of merit, as it took ICD of Rs. 4.52 crores on 14.01.2020 from its newly incorporated sister company M/s VPoint IT Solutions Pvt. Ltd. and the new company received loan from foreign/overseas companies in the month of February to May 2020. This proves that M/s VPoint IT Solutions Pvt. Ltd. was incorporated by M/s Sarvottam Fincap Ltd. for the purpose of receiving overseas loan from Foreign Fintech Companies. The conspiracy between both the appellants and the overseas investor is apparent on the face of record.
The fact that no sanction or adverse order is passed by the RBI against the appellant companies till date is also no ground to allow the present appeals, being a separate prerogative of the RBI as a Regulatory Authority. The fact that appellant M/s Sarvottam Fincap Ltd. after taking ICD of Rs. 4.52 crores from appellant M/s VPoint IT Solutions Pvt. Ltd. disbursed the small loans on high rate of interest and processing fee shows that huge amount was rotated again and again to earn high profits in a very short span by exercising coercive re- payment techniques, as mentioned above. Respondent ED in its written submissions pointed out that appellant M/s Sarvottam Fincap Ltd. through their APP “Paisa Finch” has disbursed a loan amount of Rs. 90,49,91,734, out of which a whopping amount of Rs. 17,27,97,774 was deducted upfront in the name of processing fees. M/s Sarvottam has also received an amount of Rs. 79,60,938 as interest/penalty. Thus, the total proceeds of crime are much more than the total attached amount of Rs. 5,03,85,408 & Rs. 59,416 in the accounts of the appellants respectively.
The contention of appellants that the reasons to believe recorded in the ShCN of the Ld. Adjudicating Authority are merely copy & paste of the allegations made by ED in their original complaint is also devoid of merit. The ECIR was registered on the basis of FIR lodged against the appellants and the allegations made in the said FIRs, is sufficient to form basis for reason to believe by the ED, as well as by Ld. Adjudicating Authority and accordingly recorded. The said reason to believe is not going to change its colour or form a divergent/contradictory view, after perusal of material on record by Ld. Adjudicating Authority.
Conclusion - The provisional attachment of properties as justified under PMLA due to the appellants' involvement in money laundering activities - Appeal dismissed.
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2023 (12) TMI 1387
Beneficial ownership nominee of a holder of shares or securities of the shares or securities subject matter of nomination - Scheme, intent & object behind the Companies (Amendment) Act, 1999 - implication of the scheme of ‘nomination’ under the Companies Act, 1956 as well as other comparable legislations - use of the term ‘vest’ and the presence of the non- obstante clause within the provisions of the Companies Act, 1956 - Nomination under the Companies Act, 1956 vis-à-vis law of succession.
Scheme, intent & object behind the Companies (Amendment) Act, 1999 - HELD THAT:- Reading the provision of nomination within the Companies Act, 1956 with the broadest possible contours, it is not possible to say that the same deals with the matter of succession in any manner. There is no material to show that the intent of the legislature behind introducing a method of nomination through the Companies (Amendment) Act, 1999 was to confer absolute title of ownership of property/shares, on the said nominee - In fact, while interpreting other enactments that are similar in nature by virtue of the fact that the provision of nomination within the statute begins with a non-obstante clause and/or is armed with the term ‘vest’ such as the (Banking Regulation Act, 1949, the Government Savings Certificate Act, 1959 and/or the Employees Provident Fund Act, 1952), multiple courts have rejected the argument that the nominee would become the absolute owner to the exclusion of the legal heirs. To hold otherwise would exceed the scope and extent of S. 109A of the Companies Act, 1956.
Implication of the scheme of ‘nomination’ under the Companies Act, 1956 as well as other comparable legislations - HELD THAT:- A consistent view appears to have been taken by the courts, while interpreting the related provisions of nomination under different statutes. It is clear from the referred judgments that the nomination so made would not lead to the nominee attaining absolute title over the subject property for which such nomination was made. In other words, the usual mode of succession is not to be impacted by such nomination. The legal heirs therefore have not been excluded by virtue of nomination.
There are variations with respect to the word ‘vest’ being present in some legislations (the Employees Provident Fund Act, 1952) and absent in others (the Insurance Act, 1939, the Cooperative Societies Act, 1912). Looking at the dissimilarities and the fact that uniform definition is not available relating to the rights of ‘nominee’ and/or whether such ‘nomination’ bestows absolute ownership over nominees, it is only appropriate that the terms are considered as ordinarily understood by a reasonable person making nominations, with respect to their movable or immovable properties. A reasonable individual arranging for the disposition of his property is expected to undertake any such nomination, bearing in mind the interpretation on the effect of nomination, as given by courts consistently, for a number of year - The legislative intent of creating a scheme of nomination under the Companies Act, 1956 in our opinion is not intended to grant absolute rights of ownership in favour of the nominee merely because the provision contains three elements i.e., the term ‘vest’, a non-obstante clause and the phrase ‘to the exclusion of others’, which are absent in other legislations, that also provide for nomination.
Use of the term ‘vest’ and the presence of the non- obstante clause within the provisions of the Companies Act, 1956 - HELD THAT:- In Vatticherukuru Village Panchayat v. Nori Venkatarama Deekshithulu, [1991 (4) TMI 447 - SUPREME COURT] this Court considered the question of the effect of ‘vesting’ under S. 85 of the AP Gram Panchayat Act, 1964 of the water works & appurtenant land on the Gram Panchayat. It was held that the word ‘vesting’ in S. 85 did not confer absolute title on the Gram Panchayat. Even after vesting, the Government, in appropriate cases, was amenable to place restrictions on the Gram Panchayat on enjoyment of such waterworks & lands - In Municipal Corpn. of Greater Bombay v. Hindustan Petroleum Corpn. [2001 (8) TMI 1406 - SUPREME COURT] it was observed that the term ‘vesting’ is capable of bearing the meaning of limited vesting, in title as well as possession, and is referrable to the context and situation within which it operates. The above would suggest that the word ‘vest’ has variable meaning and the mere use of the word ‘vest’ in a statute does not confer absolute title over the subject matter.
In the context of the facts of the present case, S. 109A of the Companies Act (pari materia to S. 72 of the Companies Act, 2013) provides for vesting of shares/debentures of a share/debenture holder unto his nominee ‘in the event of his death’. Similarly, Bye-law 9.11.1 under the Depositories Act, 1996 provides for ‘vesting’ of the securities unto the nominee on the death of the beneficial owner - The vesting of the shares/securities in the nominee under the Companies Act, 1956 and the Depositories Act, 1996 is only for a limited purpose, i.e., to enable the Company to deal with the securities thereof, in the immediate aftermath of the shareholder’s death and to avoid uncertainty as to the holder of the securities, which could hamper the smooth functioning of the affairs of the company. Therefore, the contrary argument of the appellants on this aspect is rejected.
Nomination under the Companies Act, 1956 vis-à-vis law of succession - HELD THAT:- The appellants’ have contended that nominations under S. 109A of the Companies Act, 1956 & Bye-law 9.11 of the Depositories Act, 1996 suggest the intention of the shareholder, to bequeath the shares/securities absolutely to the nominee, to the exclusion of any other persons (including legal representatives) and constitutes a ‘statutory testament’. However, aforesaid argument is not acceptable for the following reasons: a. The Companies Act, 1956 does not contemplate a ‘statutory testament’ that stands over and above the laws of succession, b. The Companies Act, 1956 as iterated above is concerned with regulating the affairs of corporates and is not concerned with laws of succession. c. The ‘statutory testament’ by way of nomination is not subject to the same rigours as is applicable to the formation & validity of a will under the succession laws, for instance, S. 63 of the Indian Succession Act, wherein the rules for execution of a Will are laid out.
Therefore, the argument by the appellants of nomination as a ‘statutory testament’ cannot be countenanced simply because the Companies Act, 1956 does not deal with succession nor does it override the laws of succession. It is beyond the scope of the company’s affairs to facilitate succession planning of the shareholder. In case of a will, it is upon the administrator or executor under the Indian Succession Act, 1925, or in case of intestate succession, the laws of succession to determine the line of succession.
Conclusion - Consistent interpretation is given by courts on the question of nomination, i.e., upon the holder’s death, the nominee would not get an absolute title to the subject matter of nomination, and those would apply to the Companies Act, 1956 (pari materia provisions in Companies Act, 2013) and the Depositories Act, 1996 as well - The object of introduction of nomination facility vide the Companies (Amendment) Act, 1999 was only to provide an impetus to the investment climate and ease the cumbersome process of obtaining various letters of succession, from different authorities upon the shareholder’s death.
Upon a careful perusal of the provisions within the Companies Act, it is clear that it does not deal with the law of succession. Therefore, a departure from this settled position of law is not at all warranted.
The impugned decision takes the correct view - The appeal is accordingly dismissed without any order on cost.
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2023 (12) TMI 1386
Seeking release of amount seized during a search by CGST officers - HELD THAT:- This Court in its judgment DEEPAK KHANDELWAL PROPRIETOR M/S. SHRI SHYAM METAL VERSUS COMMISSIONER OF CGST, DELHI WEST & ANR. [2023 (8) TMI 929 - DELHI HIGH COURT], had held that the concerned authorities do not have the power to cease cash found during the search conducted under Section 67 (1) of the CGST Act.
Thus, the currency ceased is required to be returned to the petitioner - the concerned authority is directed to remit the aforesaid amount into the bank account of the petitioner - petition allowed.
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2023 (12) TMI 1385
Condonation of 17 days’ delay in filing the Appeal - HELD THAT:- It is well settled that the limitation for filing the Appeal shall commence on the date when order of Adjudicating Authority is pronounced and it has no dependence on the date of uploading of the order, which has been laid down by the Hon’ble Supreme Court in V. Nagarajan vs. SKS Ispat and Power Limited & Ors., [2021 (10) TMI 941 - SUPREME COURT (LB)].
The jurisdiction to condone delay is limited to only 15 days under Section 61(2) proviso. The delay cannot be condoned as prayed in the application - Delay Condonation Application is dismissed. In result, Memo of Appeal is rejected.
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2023 (12) TMI 1384
Validity of final assessment order passed u/s 143(3) r.w.s. 144C(3) and 144B - Petitioner had filed its objections u/s 144C(2) with DRP, however, did not upload the objections in the portal due to a technical impediment in the portal - HELD THAT:- As Faceless Assessing Officer unaware of the fact that the Petitioner has filed its objections, proceeded to pass the assessment order without waiting for the directions of DRP under Sub-section 5 of Section 144C of the Act.
Therefore, without going into merits of the matter and in view of the view expressed by us in Sulzer Pumps India Private Limited [2021 (12) TMI 891 - BOMBAY HIGH COURT] and Pepsico India Holdings Private Limited [2023 (12) TMI 226 - DELHI HIGH COURT] we hereby quash and set aside the assessment order.
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2023 (12) TMI 1383
Revision u/s 263 - eligibility of exemption u/s 10(21) - HELD THAT:- We notice that entitlement of the assessee for exemption u/s 10(21) has been the core issue in entire proceedings for the year under consideration. In the original return the assessee had claimed deduction u/s 11 and it was only during the reassessment proceedings u/s 147 of the Act, the alternate claim of exemption u/s 10(21) is made by the assessee.
From the perusal of records all the details pertaining to the alternate claim of the assessee have been submitted and are part of the records. Therefore there is merit in the claim of the ld AR that the order under section 144 r.w.s. 263, though the assessee did not make any fresh submissions, all the details pertaining to eligibility of the assessee for exemption u/s 10(21) have been examined by the AO and he has taken a possible view that the impugned incomes are correctly included for the purpose of exemption.
It is relevant to notice that in the celebrated decision of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] in the context of revision proceedings u/s 263 it is held that "Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income- tax Officer is unsustainable in law"
The claim of the assessee is that the income derived from Auditorium Hire charges, hoarding site & service charges and rent are incidental to the attainment of the objectives of the assessee trust and the reason for excise of revisionary power under section 263 is that the said income is not incidental to the objectives.
AR relied on the decision of Association of Surgeons of India [2016 (7) TMI 521 - ITAT CHENNAI] wherein it was held that the income earned from letting out of Auditorium was eligible for exemption under section 11 when the income was applied to the objects of the Trust. Therefore there is merit in the contention that whether the impugned income is incidental to the objects of the assessee trust is a debatable issue and that the AO while allowing the exemption in the order passed under section 144 r.w.s. 263 has taken a possible view upon verifying the details available on record.
Thus, we hold that the conclusion of the second CIT (Exemptions) that the order passed by the AO is erroneous is not tenable and liable to be quashed. Appeal of assessee is allowed.
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2023 (12) TMI 1382
Income deemed to accrue or arise in India - Taxability of amount received - PE in India - Indo-China DTAA - whether payments made by the assessee’s customers to it constituted royalty, in respect of software supplied? - as confirmed by SC [2021 (7) TMI 1336 - SC ORDER] supplies made (of the software) enabled the use of the hardware sold. It was not disputed that without the software, hardware use was not possible. The mere fact that separate invoicing was done for purchase and other transactions did not imply that it was royalty payment. In such cases, the nomenclature (of license or some other fee) is indeterminate of the true nature.
HELD THAT:- We find no ground to interfere with the impugned order(s) passed by the High Court. The Special Leave Petitions are, accordingly, dismissed.
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2023 (12) TMI 1381
Reopening of assessment u/s 147 - AO based on the bank statements obtained from Karur Vysya Bank Ltd. had noticed certain credits into the bank account of the assessee and had called for furnishing details in this regard - HELD THAT:- We also notice that the assessee did not appear before the CIT(A) who has concluded the appellate proceedings ex-parte based on the materials available on records.
Given this in the interest of natural justice and fair play we are of the considered view that the assessee be given one final opportunity to present the case on merits. Accordingly we remit the issue back to the AO for de novo verification calling for necessary details as may be required. Assessee is directed to furnish the required information as may be called for without seeking any adjournments and cooperate with the proceedings. Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1380
Validity of assessment proceedings are time-barred - release the refunds along with interest in accordance with Section 244A as returned assessment should be accepted - petitioner states that as the limitation period to pass such orders, as per the statutory timelines prescribed u/s 153(3) read with Section 153(4) and Section 153(5) of the Act have expired, the assessment proceedings have become time-barred
HELD THAT:- In the event, the AO has not passed the assessment orders in accordance with the orders of remand passed by the ITAT within the time stipulated under Section 153(3) read with Section 153(4) and Section 153(5) of the Act, the returned assessments are directed to be accepted on the said issues. AO shall also release the refunds, if any, along with applicable interest in accordance with Section 244A of the Act within a further period of eight weeks. This Court clarifies that it has passed this order, as it is settled law that assessment is complete only when the AO passes an assessment order determining the total income and the demand notice determining the tax payable by the assessee is issued. [See: Kalyan kumar Ray v. CIT [1991 (8) TMI 291 - SUPREME COURT].
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2023 (12) TMI 1379
Validity of reassessment proceedings against non existing entity - whether it is defect which is curable u/s 292B? - HELD THAT:- It is settled law that the said defect is not curable. This court in Alok Knit Exports Ltd. [2021 (8) TMI 777 - BOMBAY HIGH COURT] while dealing with submissions of Revenue held that human errors and mistakes cannot and should not nullify proceedings which were otherwise valid and no prejudice has been caused, relying on judgment of Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT] held that the basis on which jurisdiction is invoked is under Section 148 of the Act and when such jurisdiction was invoked on the basis of something which was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, the notice is bad in law.
It has been time and again held that the notice issued to a non existing entity is not valid. Decided in favour of assessee.
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2023 (12) TMI 1378
Disallowance u/s 37(1) - expenses being contribution / donation to educational institutions, trust, local bodies - commercial expediency or not? - As decided by HC [2019 (8) TMI 1288 - GUJARAT HIGH COURT] correct test should be of commercial expediency and not whether the payment was compulsory for the assessee to make or not. ITAT has not erred in law and on facts in deleting disallowance u/s 37(1) in respect of expenses being contribution / donation to educational institutions, trust, local bodies, thus decided issue in favour of assessee - HELD THAT:- Upon hearing the counsel the Court made the following
Heard learned counsel for the petitioner-Department. Leave granted.
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2023 (12) TMI 1377
Reopening of assessment - absence of jurisdiction with the issuing authority for reopening - as alleged approval as required u/s 151 had not been obtained - four years had expired - scope of provisions of Section 151 came to be amended with effect from 01/04/2021 - As decided by HC [2023 (6) TMI 1221 - BOMBAY HIGH COURT] notice is liable to be set aside on the ground of absence of jurisdiction with the issuing authority - HELD THAT:- UPON hearing the counsel the Court made the following Delay in filing the special leave petition is condoned.
Issue notice to the respondent. Tag and list the matter along with SLP [2023 (5) TMI 1120 - SC ORDER]
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2023 (12) TMI 1376
Appeal against Assessment order completed u/s 143(3) r/w 144B - addition made u/s 68 assessed at a higher rate u/s 115BBE was against the provisions of the statute and in violation of the principles of natural justice - HELD THAT:-Instead of exhausting the remedy, the appellant rushed to this court with a writ petition. The appellant was put to notice, and after that, the assessment proceedings were completed. In exercising the power of judicial review under Article 226 of the Constitution of India, this court cannot consider the merits of the assessment order.
We do not find that the impugned assessment order is without jurisdiction or that there has been any violation of the principles of natural justice. Hence, the learned Single Judge was absolutely justified in relegating the appellant to the statutory appellate remedy. We find no reason to interfere with the said judgment.
The time granted by the learned Single Judge to prefer the appeal is already over. In these circumstances, we permit the appellant to file an appeal u/s 246A before the Appellate Authority against the impugned assessment order within a period of one week from today.
The appellant is also free to file an application for stay. If such an appeal and stay application are filed, the Appellate Authority is directed to consider and dispose of either the appeal itself or the stay application within a period of one month from the receipt of the same after hearing both sides. Needless to say, during the said period of one month, recovery proceedings against the appellant for recovery of the amounts confirmed by the assessment order shall be kept in abeyance.
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2023 (12) TMI 1375
Disallowance u/s 14A - Suo-motu disallowance - HELD THAT:- We find that the assessee is a Bank. As relying on SOUTH INDIAN BANK LTD. [2021 (9) TMI 566 - SUPREME COURT] we direct Ld. AO to examine this aspect of the matter and apply the ratio of the decision to the case of the assessee. If the disallowance as computed by Ld. AO falls below the suo-motu disallowance as offered by the assessee, no further disallowance would be called for.
Adjustment of this item u/s 115JB - As we find that this issue is covered in assessee’s favor by the decision of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - Respectfully following the same, we direct Ld. AO not to make any such adjustment u/s 115JB.
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2023 (12) TMI 1374
Impounding of the NCLT order under Section 33 of the Gujarat Stamp Act - 30-day stamping requirement to instruments presented under Section 31 - Interpretation of Section 32(3) regarding the Collector's authority to impound.
Whether the subject instrument being the order of the NCLT Ahmedabad could have been impounded under Section 33 of the Gujarat Stamp Act, 1958 and consequently subjected to duty and penalty under Section 39 thereof, particularly when the said instrument was presented under Section 31 of the Stamp Act for the purpose of the opinion of the Collector, who would have no jurisdiction to impound the same as held by the Hon’ble Supreme Court of India in Government of Uttar Pradesh & others v/s Raja Mohammed Amir Ahmad Khan? - HELD THAT:- Even the State has conceded to the fact that powers under Section 31 of the Act are confined to the administrative exercise of granting an opinion, when after the Collector would become functus officio, there can be no simultaneous invocation of the process provided for under Section 33 of the Act. Consequentially when we read Section 39 of the Stamp Act, which deals with the Collector’s power to stamp instruments impounded and impose penalty, for the reasons of holding that the instrument presented for opinion cannot be impounded would also lead us to hold that no penalty under Section 39 thereof can be imposed. The question is therefore answered in the negative.
Whether the provisions of Section 17 of the Stamp Act requiring an order of the National Company Law Tribunal to be stamped within 30 days from the date of such order could at all be made applicable in respect of an instrument presented to the Collector under Section 31 of the Stamp Act and whether any proceedings could have been initiated for a purported breach thereof? - HELD THAT:- Section 31 of the Stamp Act deals with ‘Chapter – III Adjudication as to Stamps’. Under this Section, though for the purpose of seeking an opinion, the limitation of 30 days will not be applicable as the process thereunder is that of giving an opinion or adjudicating on the stamp duty chargeable, however, the provisions of Section 17 of the Stamp Act mandate stamping of instruments within 30 days as in the case of the Tribunal’s order. What is to be noted as the word used in Section 17 is ‘stamped’ and not ‘duly stamped’ which term means a stamp affixed being not less than the proper amount in accordance with law. In other words, irrespective of an adjudication or an opinion, an instrument has to be stamped either fully or as perceived by the holder within 30 days in case of an order of the Tribunal and therefore the provisions of Section 17 of the Stamp Act requiring an order to be stamped within 30 days would be applicable to an instrument presented to the Collector under Section 31 of the Act.
The scheme of adjudication is a separate mechanism prescribed under Section 31 and consequences thereof under Sections 32 and 33 of the Stamp Act. For failure to adhere to the timeline no proceedings for breach as impounding can be exercised. The question therefore is answered accordingly i.e. so far as the applicability of provision of Section 17 requiring an order of the Tribunal to be stamped within 30 days is answered in the affirmative and so far as whether any proceedings could have been initiated for a purported breach thereof the answer is in the negative.
Whether Section 32(3) of the Stamp Act disabling the Collector from endorsing any instrument brought to him after the expiration of one month from the date of its execution can be construed as an enabling provision authorizing the Collector to impound the instrument under Section 33 of the Stamp Act? - HELD THAT:- Section 32(3) of the Stamp Act disables the Collector from endorsing any instrument brought to him after the expiration of one month from the date of its execution. A document presented under Section 31 for the opinion of the Collector cannot be impounded under Section 33 of the Stamp Act and having opined that the only fall out for having failed to stamp the instrument within 30 days would be that the Collector will be disabled from endorsing any instrument. The question is answered in the negative inasmuch as there will be no authorization in the Collector in impounding such an instrument under Section 33 of the Stamp Act.
Whether the general time limit prescribed under Section 17 of the Stamp Act providing for stamping of the order of the National Company Law Tribunal within 30 days from the date of such order can be applied when such order/instrument itself permits the applicant to present the order before the Collector within 60 days from the date of the receipt of the order? - HELD THAT:- Since the provisions of Section 17 have been discussed while answering Question B above, what is evident is that the order of the Tribunal as per the provisions of Section 17 has to be stamped within 30 days from the date of the order. It is the contention of the company that as per the relevant clauses of the scheme, which defined the terms ‘appointed date’ and ‘effective date’, it was open for the companies to file the instrument before the stamp authority within 60 days is contrary to the mandate of Section 17 of the Act. Well settled it is that taxing statutes are required to be strictly interpreted especially when the language used by the legislature is plain and unambiguous. In this context, it is well settled that a limitation period provided under a statute cannot be altered and amended or extended. The procedure must be adhered to in the manner prescribed. The term in section 17 is very clear that the Tribunal’s order has to be stamped within 30 days from the date of the order. The Full Bench of the Bombay High Court in the case of Reliance Industries [2016 (4) TMI 482 - BOMBAY HIGH COURT] has unequivocally held that the scheme of arrangement or amalgamation and the order sanctioning the scheme would be an instrument under section 2(l) of the Stamp Act. What is chargeable to duty is the instrument and not the transaction - The answer therefore is that the general time limit prescribed under Section 17 of the Stamp Act would apply to an order of the Tribunal. The question is accordingly answered in the affirmative.
Whether the action of impounding the said instrument and subjecting it to imposition of penalty is not contrary to the scheme and provisions of the Stamp Act and more particularly Section 40 thereof, which vests a discretion with the Collector of not impounding such instrument even if presented beyond the period of 30 days but before the period of 1 year from the date of such instrument? - HELD THAT:- Reading Section 40 of the Act which has also been reproduced in the course of written submissions by the State Government indicates that from the title itself it is applicable to instruments which are unstamped by accident. The circumstances to invoke Section 40 of the Act and get the benefit of the extended period of a year is only available when the omission to duly stamp such instrument has been occasioned by accident, mistake or urgent necessity. Reading the section would indicate that as per the scheme in order to undertake the benefit thereof the instrument not duly stamped must be within one year from the date of its execution and such presentation and omission to pay the duty must be owing to the three circumstances narrated hereinabove. In the facts of the present case, there are no eventualities or circumstances to suggest any of the three ingredients for invoking Section 40. The question therefore is answered in the negative.
Whether the CCRA has erred in rejecting the Applicant’s submission that there was no delay in filing of application under Section 31 of the Stamp Act, the same having been filed within 30 days of the Effective Date under the Scheme, especially when the consideration amount payable under the Scheme could not have been computed unless the Scheme was made effective? - HELD THAT:- There was no question of interpreting the provision otherwise as suggested by the company by relying on the relevant clauses of the scheme to seek an extended period of limitation. The instrument i.e. the Tribunal’s order was signed on 18.09.2019 and was presented before the Collector on 13.11.2019 approximately after two months from the date of its execution. Even the certified copy of the order was received on 30.09.2019. This was therefore also not within the time limit of 30 days as per the mandate. The CCRA therefore has not erred in holding that the instruments presented were beyond a period of limitation. The answer to the question is therefore No.
Whether the imposition of penalty is not disproportionate, excessive, unreasonable, illegal, and unjust, in the absence of any mens rea on the part of the Applicant which had itself presented the said instrument for seeking opinion of the Collector under Section 31 of the Act and which was within the time stipulated in the order of NCLT Ahmedabad itself? - Whether the CCRA ought not to have set aside the order of the Collector imposing penalty, particularly since the Collector has failed to assign any reasons whatsoever for imposition of the said penalty, and in absence of assignment of reasons by the Collector, whether the CCRA has not erred in supplanting its own reason to justify the imposition of penalty? - HELD THAT:- Once having presented the document for opinion/adjudication, albeit in this case, beyond a period of 30 days, it is a clear case of a perception of the company as well as the authority and therefore it cannot be inferred that there was an intention to evade payment of stamp duty. Section 39 indicates that it deals with the power of the Collector to stamp instruments impounded. The instruments presented under Section 31 cannot be impounded, Section 39 cannot also be invoked. The bonafides of the companies was apparent when on the order passed by the Collector it willingly deposited an amount of Rs. 25 crores worked out on a consideration of Rs. 4639 crores. There was no intention to avoid/evade payment. Once having held thus, the penalty clause of Section 39 could not be invoked.
The imposition of penalty is disproportionate, excessive, unreasonable , illegal, and unjust, in the absence of any mens rea on the part of the applicant - Stamp Reference is accordingly disposed of.
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2023 (12) TMI 1373
Challenge the appointment of Arbitrator on the part of the respondent Insurance Company - whether the dispute is arbitrable can be decided at the stage of section 11 of the Arbitration and Conciliation Act, 1996? - HELD THAT:- Reliance is placed on the decision of the Apex Court in the case of Magic Eye Developers Private Limited vs. Green Edge Infrastructure Private Limited and others, [2023 (5) TMI 510 - SUPREME COURT], where it was held that 'When the claim is disputed, it is the arbitrator who may competently decide the claim. Arbitrability of the dispute is also to be decided by the arbitrator. While exercising the powers under section 8 of the Arbitration and Conciliation Act, 1996, such questions cannot be gone into by this Court and when there is an arbitration clause, the aspects are to be decided by the arbitrator for such purpose.'
This Court does not find any reason to reconsider the contention of the respondent insurance company that the dispute is non-arbitrable inasmuch, as consent letter has been sent by the petitioner on 24.12.2018 and payment had been received in January, 2019 without any protest.
Petition allowed.
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2023 (12) TMI 1372
Recovery of amount u/s 446 of the Companies Act, 1956 against a debtor of the company in liquidation - time limitation u/s 458A of the Act - HELD THAT:- A careful perusal of the Section 458A of the Companies Act, 1956 would show that it has overriding effect over the provisions of the Limitation Act and in proceedings under the Act, the period of limitation would commence from the date of passing of order on winding up and excluding a period of one year immediately following the date of winding up order.
The Supreme Court in the case of KARNATAKA STEEL & WIRE PRODUCTS VERSUS KOHINOOR ROLLING SHUTTERS & ENGG. WORKS [2002 (11) TMI 355 - SUPREME COURT] held that 'The legislature, by way of an amendment, brought into force the provisions of Section 458-A, so that an official liquidator, who is supposed to be in custody of the assets and liabilities of the company, would be able to file a claim on behalf of the company, which was legally enforceable on the date of the winding up, after excluding the period, indicated under Section 458-A of the Companies Act, so that the company or its shareholders will not suffer any loss. But by no stretch of imagination, the said provisions contained in Section 458-A can be construed to mean that even a barred date (sic debt) or a claim which was not enforceable on the date of the winding up, would stand revived, once a winding-up application is filed and order is made by virtue of Section 458-A of the Companies Act.'
Reverting to the instant matter, evidently, the order for winding up was passed by this court on 03.06.2011, whereby an OL was appointed as Provisional Liquidator. It is uncontroverted that the payment was made to the respondent company on 10.04.2008, and therefore, the initial period of limitation for re-claiming the amount was three years i.e., 10.04.2011, which of course was before the order of winding up was passed.
On a careful perusal of Section 458A of the Act, subsequent to the Provisional Liquidator being appointed and taking over the charge, the period of limitation for claiming the recovery of such amount commenced on 03.06.2011 and extended by another year, eventually, by all means expired on 03.06.2015. It is also borne out from the record that the present application by the OL has been filed on 26.10.2017.
Ex-facie, the application moved on behalf of the applicant / OL for recovery of the amount claimed alongwith interest is barred by limitation in terms of Section 458A of the Act.
The instant application moved by the OL is hereby dismissed.
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2023 (12) TMI 1371
Petition u/s 482 Cr.P.C. against the order passed by ASJ, Patiala House Court, New Delhi whereby his application u/s 203 Cr.P.C. was dismissed on the ground the petitioner is not proposed accused in complaint filed by respondent - HELD THAT:- As perused the present petition and the order passed by this court by virtue of which the same relief was claimed and the same was dismissed as withdrawn. A further perusal for the same shows that the present petition has been filed by the petitioner on the grounds which were enumerated in the previous appeal but couched differently.
It is pertinent to note here that nothing has been bought before this court to show that there are changes in the circumstances which emerged since the dismissal of the earlier petition that prompted him to file the present petition. One cannot lose sight of the fact that the petitioner is still not a proposed accused as submitted by the learned counsel for the respondent, in the complaint filed by the respondent – SEBI.
Since nothing has changed from the dismissal of the previous petition and the present petition has been filed under the guise of seeking the similar relief which was already dealt by this court [2023 (5) TMI 1395 - DELHI HIGH COURT] this court is of the view that under the garb of filing the present petition the petitioner cannot be permitted to reassert or reiterate the same grounds seeking identical reliefs.
It is essential to uphold the principles of judicial economy and finality in legal proceedings to avoid unnecessary duplication and protraction of legal process. Therefore, in light of the foregoing, the present petition is dismissed.
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2023 (12) TMI 1370
Suit for Declaration for declaring the plaintiff (respondent No.1 herein) as the Karta of Late Shri D.R. Gupta and Sons, HUF allowed - married daughter can be the Karta of a Hindu Undivided Family (HUF) or not - Whether the Hindu Succession Amendment Act, 2005 to Section 6 of the Act, 1956 is retrospective? - HELD THAT:- A “Joint Hindu Family” consists of male members descended lineally from a common male ancestor and included their unmarried daughters, wives, mothers and widows. A “coparcenary” is a narrower body which is a subset within a Joint Hindu Family where an interest in the property is created by birth. Though a joint family status is a result of birth, the possession of joint property is only an appendage and not prerequisite for the constitution of such a family as held in Haridas vs. Devaki Bai, 1926 SCC OnLine Bom 76. On the other hand, a “coparcenary” is created only when there is joint or coparcenary property.
Birth in the Joint Hindu Family, seniority by age and the status of being a Coparcener are the necessary qualifications to become a Karta. The traditional Law nowhere proscribed a female from being a manager but the requisite of being the “senior most male” was the necessary corollary of the fact that only male members of the Joint Hindu Family who were born within the degrees of coparcenary, were given the status of a Coparcener.
Whether recognition of a daughter as a Coparcener necessarily entitles her to be a Karta? - HELD THAT:- The concept of coparcenary is derived from the joint ownership of a common pool of assets held by a family and the necessary corollary was that who owns the property, would have a right to manage it. When under the traditional Hindu law, the woman was not entitled to coparcenary property; resultantly, she could not assume the position of Karta. However, the Amendment to Section 6 of the Act, 1956 redefines the meaning of coparcenary as understood under the traditional Hindu Law, which is no longer limited to devolution of interest in the coparcenary property alone but encompasses all other incidents of a Coparcener, including the right to be a Karta. To say that a woman can be a coparcener but not a Karta, would be giving an interpretation which would not only be anomalous but also against the stated Object of introduction of Amendment.
The appellant claims that the learned Single Judge failed to appreciate a significant aspect that performance of spiritual and managerial duties is by the Karta of the HUF which respondent No. 1 being a female, cannot perform. Thus, it has to be accepted that only the appellant, being the eldest male coparcener, is eligible to become the Karta of the “D.R. Gupta & Sons HUF” - This argument raises a fundamental question of the necessary competency of the woman to perform the religious and familial obligations of a Karta in the backdrop of Mitakshara Law.
Spiritual efficacy of a female Coparcener - HELD THAT:- The spiritual efficiency is an indispensable requirement under the Dayabhaga Law; however, the same cannot be presumed under Mitakshara law. It is amply clear from the above that the spiritual duties performed by a Karta of an HUF governed by Mitakshara law was only coincidental to the fact that only male descendants were entitled to become coparceners in the past. Thus, with the amendment in law conferring daughters with coparcenary rights, spiritual efficiency or the ability to perform certain rituals cannot become a prerequisite qualification for becoming a Karta of an HUF governed by Mitakshara law - Spiritual efficiency comes under consideration only when the question of preference arises. In the present case, the question of preference is obviated by the overt seniority by age of respondent No.1 in comparison to the appellant.
Non-Participation in the Affairs of the Family after Marriage - HELD THAT:- Being a Karta is conferment of legal status which includes right to manage the HUF properties and even if the appellant represented himself as Karta in official correspondence on behalf of HUF to manage the property, it does not take away the legal right of the eldest member of the Coparcener of the family, even if she is a woman, to stake a claim to be a Karta.
The right of the daughter of a Coparcener to enjoy the status of a Coparcener from the commencement of the Hindu Succession (Amendment) Act, 2005 cannot hinge upon the life span of her father. Such a distinction can certainly not sustain the test of intelligible differentia that was sought to be addressed through the Amendment.
Thus, in the present case, it is established there was no continuation of “D.R. Gupta & Sons HUF” after the demise of Shri D. R. Gupta in the year 1977 and the property got mutated in the name of all the legal heirs. In furtherance of such severance of status, the also parties determined the shares of each of the branch of the five brothers to be 1/5th as mentioned in the Memorandum of Settlement. Thus, even though no partition by metes and bounds took effect between the parties, a partition took place leading to severance of status of the undivided family into a divided family.
The respondent No. 1 is hereby declared as the Karta for the purposes of representing the “D.R. Gupta & Sons HUF” before the Competent Authority. Deficient Court fee be paid - there are no merit in the present appeal which is hereby dismissed.
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2023 (12) TMI 1369
Winding up of the respondent on the ground that it had failed to pay his admitted dues - Sections 434 and 439 read with Section 433(b), (e), (f) of the Companies Act, 1956 - HELD THAT:- Since the appellant’s salary slips placed on record are not disputed, it is evident that the TDS was deducted by the respondent and that it was liable to deposit the same with the concerned authorities at the relevant time - Similarly, the appellant also claimed that the respondent has failed to deposit the provident fund as reflected in the salary slips. The deposit of provident fund is also a statutory obligation and the failure to do so would invite proceedings by the concerned authorities.
Insofar as the other claims are concerned, this Court finds no infirmity with the impugned order dated 12.11.2018 holding that the same are subject matter of some controversy. It is settled law that proceedings under Section 433(e) of the Companies Act would lie only in respect of debts that are admittedly due. A company is not liable to be wound up under Section 433(e) of the Companies Act in respect of debts that are disputed. However, the company’s defence as to the claim of an admitted debt must be bonafide and not a moonshine defence.
In the present case, it cannot be accepted that the controversy raised by the respondent is, ex facie, untenable or a moonshine defence. Thus, there are no infirmity with the impugned orders passed by the learned Company Court except to the limited extent that the appellant’s claim regarding TDS and statutory dues has not been included in the admitted dues.
Insofar as the statutory dues regarding provident fund is concerned, it is not disputed that the respondent is liable to deposit the same. The learned counsel for the respondent states, on instructions, that the amount of outstanding provident fund will be paid to the appellant along with interest within a period of four weeks from date, if the same is not deposited with the concerned authorities.
It is clear that there is no dispute as to the payment of the amount of ₹ 2,62,800/-. The learned counsel for the respondent states that this amount would be paid along with the applicable interest. He states that in the event the respondent had not deposited the said amount with the PF authorities, the respondent shall do so within a period of four weeks from date along with applicable interest for the period.
The respondent shall deposit the admitted amount of ₹ 2,62,800/- along with full interest as applicable with the concerned PF authorities within a period of four weeks from today and provide the evidence for the same to the appellant - The respondent shall also pay costs of ₹ 50,000/- to the appellant within the said period - appeal disposed off.
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