|
Advanced Search Options
Case Laws
Showing 401 to 420 of 1430 Records
-
2023 (12) TMI 1030
LTCG - Deduction u/s 54EC on account of investment in REC Bonds - whether exemption under Section 54EC can be denied on account of the fact that deeming fiction of short term capital gain was created u/s 50 ? - HELD THAT:- As decided in the case of Aditya Medisales Ltd. [2013 (11) TMI 576 - GUJARAT HIGH COURT] has held that exemption u/s 54EC of the Act could not be denied on account of the fact that deeming fiction of short term capital gain was created under Section 50 of the Act. In this case the assessee company sold automatic electric monitoring system. The company invested gain amount in Rural Electrification Bonds and claimed exemption under Section 54EC of the Act.
AO found that short term capital gain was offered by assessee under Section 50 of the Act and disallowed exemption under Section 54EC claimed by the assessee on the ground that same was not available on a short term capital gains. The High Court held that since capital gains arose out of long term capital asset and same was invested in specified assets, exemption under Section 54EC could not be denied on account of the fact that deeming fiction of short term capital gain was created - The aforesaid decision has also been followed by Ahmedabad Tribunal in the case of DCIT M/s. Liva Healthcare Ltd. [2019 (1) TMI 210 - ITAT AHMEDABAD]
Whether benefit u/s 54EC of the Act is available in case the assessee invested a sum of Rs. 50 lakhs in two Financial Years? - As decided in C. Jaichander [2014 (11) TMI 54 - MADRAS HIGH COURT] held that where assessee invested a sum of Rs. 50 lakhs each in two different Financial Years, within a period of six months from date of transfer of capital asset, he was eligible for deduction u/s 54EC - The facts in this cases were that the assessee sold a property vide sale agreement dated 18.02.2008 and invested a sum of Rs. 1 crores out of sale proceeds in certain bonds in two Financial Years 2007-08 and 2008-09.
AO held that assessee could take benefit of investment in said Bonds to a maximum of Rs. 50 lakhs only under Section 54EC(1) and accordingly, held that the other sum of Rs. 50 lakhs invested over and above ceiling prescribed did not qualify for exemption. However, the Madras High Court held that from a reading of Section 54EC(1) and first proviso, it was clear that time limit for investment was six months from the date of transfer and even if such investment felt under two Financial Years, benefit claimed by the assessee could not be denied and there was no cap on investment in Bonds. Accordingly, the Madras High Court held that the assessee was eligible for deduction under Section 54EC of the Act in respect of said investments.
The position becomes clear that for the impugned A.Y. 2014-15, as it stood at the relevant time, if the assessee made investment in REC Bonds for Rs. 50 lakhs each, the assessee would be eligible for deduction under Section 54EC of the Act, provided both the investments were made within a period of six months as prescribed under 54EC of the Act. In the present case, the assessee had sold the asset under consideration on 16.12.2013, whereas the second investment in REC Bond was made on 30.06.2014.
In the case of Alkaben B. Patel vs. ITO [2014 (3) TMI 842 - ITAT AHMEDABAD] held that in terms of General Clauses Act, 1897 the period of six months mentioned in Section 54EC has to be recorded as six British Calendar months. The issue for consideration before ITAT Special Bench was that whether for the purpose of Section 54EC, the period of investments should be calculated as six months after the “date of transfer” or to be reckoned as 180 days from “date of transfer”. The ITAT held that the term “month” is not defined in the Act and therefore, as per the definition of the term “month” as per General Clauses Act, 1897 shall mean of month recognized according to the British Calendar.
Again, in the case of Niamat Mahroof Virji [2016 (12) TMI 1081 - ITAT MUMBAI] held that in terms of General Clauses Act 1897, period of six months mentioned in Section 54EC has to be recorded as six British Calendar months. Accordingly, it was held that where assessee sold his ancestral property on 13.10.2010, investment of capital gain made in REC Bonds on 30.04.2009 was eligible for deduction under Section 54EC of the Act.
Thus we are of the considered view that investment of Rs. 50 lakhs in REC Bonds on 30.06.2014 falls within the period of six months as stipulated under Section 54EC of the Act and is hence eligible for deduction under Section 54EC of the Act. Appeal of assessee allowed .
-
2023 (12) TMI 1029
TP Adjustment - US Transactions non US Transactions - scope of MAP agreement - associated enterprise of the assessee in the USA filed an application under mutual agreement procedure (MAP) with the competent authority of the US under article 27 of the India USDTAA and the settlement has been arrived at between the competent authority of India with respect to the adjustment on account of Transfer Pricing issues relating to the US transactions - DR vehemently stated that the same treatment should be given to the non US transactions as there is no difference in FAR of US transactions and non US transactions.
HELD THAT:- It is true that this is an appeal by the assessee but it is equally true that the other party i.e. the revenue can raise issue under rule 27 orally as settled in the case of Sanjay Sahney [2020 (5) TMI 441 - DELHI HIGH COURT] and respectfully following the same the oral request of the DR is accepted.
It would be better to refer to the settlement arrived between the competent authority of India and the competent authority of USA to resolve the cases relating to Hewitt India for A.Y. 2006-07 to 2010-11 by adopting the values relating to US related international transaction - No hesitation to direct the AO / TPO to adopt the same approach for the non US transactions as adopted in the MAP for US transactions and determine the TP adjustment, if any, after affording a reasonable and sufficient opportunity of being heard to the assessee. See J.P. Morgan Services India Private Limited [2019 (4) TMI 219 - BOMBAY HIGH COURT] Appeal of the assessee is allowed for statistical purpose.
-
2023 (12) TMI 1028
Revision u/s 263 by CIT - excess claim of deduction u/s 80P - assessee stated to have earned income by way of interest from deposits made in Nationalized Banks - PCIT reveals that on scrutiny of the records of the assessee he noted that the assessee being a Co-operative Society engaged in providing credit facility to its members for agriculture it had been allowed excess claim of deduction u/s 80P of the Act in the assessment framed u/s 143(3) - PCIT noted that while the assessee had earned both exempt income and taxable income, the expenses had not been properly apportioned between two sets of income - HELD THAT:- We find merit in the contention of assessee that the basic premise of PCIT for arriving at finding of excessive claim of deduction u/s 80P(2)(a)(i) by the assessee, rested on assumption of incorrect and unverifiable facts. It is not clear to us as to how the Ld. PCIT arrived at the finding that the income of the assessee eligible to deduction u/s 80P(2)(a)(i) was only Rs. 36 Crore and not Rs. 41 Crore as claimed and allowed to the assessee.
While the assessee claim of deduction of Rs. 41 Crores of profit u/s 80P(2)(a)(i) emanated from the records including the financial statement, the tax audit report and computation of income filed by the assessee, all documents filed before us in Paper book, and was also examined during assessment proceedings by issuance of notice u/s 142(1) of the Act and replies filed by the assessee placed before us,the basis of the Ld. PCIT for holding that the assessee was eligible to only Rs. 36 Crores deduction under Section 80P(2)(a)(i) of the Act is not clear nor does it seen to arise from the records before us.
Therefore, we hold that the very basis for assumption of jurisdiction to revise assessment order fails on account of the error in the assessment order having been found by the Ld. PCIT on the basis of incorrect facts.
Records do not support the finding of the PCIT that the assessee had claimed excessive deduction u/s 80P(2)(a)(i) - And as long as the finding of error of PCIT is based on facts which palpably do not emanate from records, it is immaterial whether this fact is pointed out for the first time before us. In view of the same there is no error in the assessment border vis a vis quantum of allowance of deduction to the assessee u/s 80P - The revisionary order passed by the Ld. PCIT, therefore, needs to be set aside for having failed to fulfill one of the twin conditions , of the assessment order being both erroneous and prejudicial to the interest of the Revenue, necessary for invoking revisionary jurisdiction , as laid down in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] this ground alone.
Subsequently, after noting that as per records the assessee was eligible to lesser claim of deduction under Section 80P(2)(a)(i) of the Act, the Ld.PCIT has gone on a different tangent after receiving the assessee’s reply to the show cause notice. We find from the reply filed by the assessee during revisionary proceedings that the assessee stated to have earned income by way of interest from deposits made in Nationalized Banks. Picking this information he held that the assessee was not eligible to claim deduction on this interest income as per the provisions of law and having been allowed deduction on the same, the assessment order was in error causing prejudice to the Revenue.
We are not in agreement with the Ld. DR. Even if the Ld. PCIT had noted the fact of assessee having claimed deduction on an ineligible income from the assesses statement of facts before him, it was his bounden duty to confront the assessee that it was ineligible in law for deduction u/s 80P of the Act, before holding the assessment order being erroneous on having allowed the assessee’s claim of deduction under Section 80P(2)(a)(i) of the Act on the same. In the absence of any show cause notice being given to the assessee, the finding of error by the Ld. PCIT on account of the same is not sustainable in law and the revisionary order passed, therefore, is liable to be set aside for the same reason also.
PCIT is unclear and is not sure as what exactly is the error in the assessment order. He begins by noting error on account of excess claim of deduction under Section 80P(2)(a)(i) due to incorrect apportionment of expenditure to exempt income while assuming jurisdiction u/s 263 but goes on to hold the error to pertain to allowance of claim of deduction u/s 80 P to income which was otherwise not eligible in law to such claim, and then concludes by reverting back to his original finding of error on account of excessive claim of deduction on account of incorrect appropriation of expenses. The powers of revision being exercisable on a categorically finding of error in assessment order causing prejudice to the Revenue, this uncertainty in the finding of the error by Ld. PCIT renders the revisional order completely unsustainable in law. Decided in favour of assessee.
-
2023 (12) TMI 1027
Addition towards limited return on share capital - limited return on share capital needs to be given out of reserves and cannot be debited to P & L Account as expenditure - DR submitted that the limited return on share capital at 1% on the share capital amount paid to the farmers is identical to the dividends and cannot be a charge to the P & L Account and it cannot be construed as a Finance Cost as claimed by the assessee - CIT(A) deleted the addition stating that it is legitimate business expenditure - assessee-company is a special category company under the Companies Act and is covered by the Part-IXA of the Companies Act, 1956 - HELD THAT:- The limited return is nothing but a maximum dividend payable / paid to the Members of the Producer Company as authorized by the Articles of Association and hence it cannot be considered as an expenditure and claimed as expenditure. It is not a charge to the P & L Account but only an appropriation of the profit and hence the Ld. AO has rightly disallowed the same. We therefore allow the Grounds No. 1 & 2 raised by the Revenue.
Disallowance towards withheld price / additional price - as per DR same is only application of income as the company makes payment towards additional price / withheld price of milk procured out of profit and therefore, the same cannot be debited to P & L Account as an expense and not an allowable deduction - CIT(A) deleted addition - HELD THAT:- We find that the assessee-company has paid withheld price to the milk suppliers even in the earlier assessment years and the same was allowed by the Ld. AO. The Coordinate Bench of the Tribunal in the assessee’s own case for the AY 2010-11 [2017 (11) TMI 1363 - ITAT VISAKHAPATNAM] has allowed the appeal of the assessee thereby directed the Ld. AO to delete the addition of payment of withheld price made to the milk producers. However, as pointed out by the Ld. DR, the Revenue is in appeal before the Hon’ble High Court of Andhra Pradesh contesting the order of the ITAT. In this connection, we hereby direct the Ld. AO to decide this issue based on the outcome of the decision of the Hon’ble High Court of Andhra Pradesh, in order to avoid multiplicity of litigation. Accordingly, this ground raised by the Revenue is disposed off for statistical purposes.
Allowability of expenditure incurred during the General Body meeting by way of payment of gifts to the Members of the Producer Company - CIT(A) deleted the disallowance made - as per DR distribution of gifts are not encouraged in AGM to curb cooperate misdoing and is against established practice of corporate governance - HELD THAT:- Admittedly these amounts of gifts were distributed at the time of AGM which is being gifted to the milk producers who were also Members of the assessee-company. We also find that these gifts are made to the Members who were also suppliers of milk and are also shareholders of the assessee-company. Hence we are of the considered view that these expenditures are in the nature of business promotion expenditure which shall be allowed as deduction U/s. 37 of the Act. We therefore find no infirmity in the order of the Ld. CIT(A) on this ground - Decided against revenue.
-
2023 (12) TMI 1026
Disallowance of the standard deduction u/s 24(a) against the income declared by the assessee under the head Income from House Property - HELD THAT:- We are of considered opinion that judgement of the Hon’ble Supreme Court in the case of Suraj Lamps & Industries (supra) is in regard to transfer and conveyance of a title for civil consequences between private parties. However, with regard to the fiscal purposes, between assessee and Revenue, where on the basis of existence of an interest in an immovable property, certain rights or interest including those right to executed further convey the title are involved, the documents like GPA, sale agreement or Will have to be considered valid and effective for all purposes for creating a liability on assessee or to give benefit to the assessee. Although in the judgement relied by the ld. AR in the case of Rita Kuchal [2015 (5) TMI 1254 - ITAT DELHI] there is no specific discussion on this aspect, however, cognizance of the judgement of the Hon’ble Supreme Court in the case of Suraj Lamps & Industries [2011 (10) TMI 8 - SUPREME COURT] was taken, but, for the purpose of section 24(a), the right of an assessee to be entitled to receive the rental income was given precedence.
Thus, the judgement which the ld. AR has relied in CIT vs. Smt. Wiran Bai Jaggi [2002 (8) TMI 889 - DELHI HIGH COURT] wherein the judgement of the Hon’ble Supreme Court in case of CIT vs. Podar Cement [1997 (5) TMI 2 - SUPREME COURT] has been relied is still applicable to the case of the assessee. The observations of the Hon’ble Supreme Court in the case of Podar Cement Pvt. Ltd. (supra) are worth to be reproduced to understand how the law propounded in regard to section 22 of the Act is different from the one propounded for the purpose of section 17 of the Registration Act in Suraj Lamps & Industries [2011 (10) TMI 8 - SUPREME COURT].
Thus, furthermore, the ld. DR could not defend the argument that in the subsequent years the CIT(A) has deleted the addition made by the AO holding that the rent received by the assessee is to be assessed as ‘income from house property.’ Thus, we are inclined to allow this ground no 2.
Addition on account of business expenses - disallowance on the ground that appellant has no money lending business whereas assessee claims that the money lending business was dormant and the assessee was in litigation with the debtors to recover the principal and interest - HELD THAT:- As coming to the present assessment year, at the outset, we would like to reiterate the settled proposition of law that every assessment year is independent and there is no applicability of principle of res judicata, if the facts are distinguishable and there is evidence in that regard. In the present year 2015-16, the assessee is no more into subletting business, but, has earned income from property and has also claimed deduction u/s 24(a) of the Act which we have allowed in ground No.2. During the year, the assessee has changed the receipts from LIC India from one received in the capacity as a lessee who has created the sublease to an owner who has rented the premises. Thus, certainly the expenses of the description mentioned in the assessment order could not be attributed to the income from property as standard deduction u/s 24(a) of the Act stands allowed.
It appears that during assessment proceedings the assessee claimed that apart from leasing of property business the assessee is also engaged in money lending business. This was considered by the AO to be an afterthought, but, the CIT(A) has gone into the issue in a more detailed manner.
As in the present assessment year there is no interest income at all either under the heads, ‘Income from other sources’ or ‘business income.’ The claim of the assessee is that the lending business should be accepted on the basis of consistency. However, the same cannot be accepted as ld.CIT(A) has made a very specific observation on the basis of the financials. There are only two entries which the assessee claims to be money lending business.
Now, in regard to one of those the assessee has filed a copy of complaint u/s 138 of the Negotiable Instruments Act filed against Sunil Mantri Realty Ltd. and the averments of this complaint shows that the assessee had entered into an agreement on 01.01.2010 to purchase certain flats from Sunil Mantri Realty Ltd., for which payments were made, but, as that vendor could not supply the flats, the vendor had given a cheque of Rs. 4,10,00,000/- to the assessee to return the sale consideration and that cheque was dishonoured. Thus, the averments in the complaint do not at all indicate that the money claimed to have been standing as a loan was ever given as a loan for the purpose of money lending business. In fact, in AY 2012-13, there was an issue of undisclosed income of Rs. 12 lakhs wherein the AO had made an addition of Rs. 12 lakhs on the ground that the assessee has been showing interest income from M/s Sunil Mantri Realty Ltd. on accrual basis. M/s Sunil Mantri Realty Ltd., had paid interest and deducted tax which was reflected in 26AS, but, there was lack of reconciliation.
The order of ld.CIT(A) for AY 2012-13 show that there is a mention of cheque of Rs. 4,10,00,000/- given by the debtor on 01.09.2013 which could not be encashed and for which the assessee has filed the case and the ld.CIT(A) had confirmed the addition of Rs. 12 lakhs. Thus, we are of the considered view that what ld. AR has relied in regard to the previous or subsequent years about the money lending business of the assessee is not sustainable in the facts discussed above from the perspective of ld.CIT(A) and we do not consider that there is any error in the sustenance by ld.CIT(A). Accordingly, this ground is decided against the assessee.
-
2023 (12) TMI 1025
Disallowance of claim u/s. 80P(2)(a)(i)/80P(2)(d) - assessee received interest from co-operative banks and other cooperative societies - AR submitted that the cooperative societies /cooperative banks with which assessee had made investments, are registered with the Karnataka Cooperative Societies Act and, therefore, the interest/dividend earned by the assessee from such investments, made with such cooperative banks are eligible for deduction u/s 80P(2)(d) - HELD THAT:- When we look at the decision of Hon’ble Supreme Court in case of Totgars Co-operative Sale Society's case [2010 (2) TMI 3 - SUPREME COURT] relied by the DR, SC was dealing with a case where the assessee therein, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such amount retained by the assessee therein was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. On these facts Hon’ble Supreme Court held the assessing officer was right in taxing the interest income indicated above under Section 56 as income from other sources of the Act.
Further the adjudication by the Hon’ble Supreme Court in case of Totgars Co-operative Sale Society Ltd. vs. ITO(supra) was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a cooperative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a cooperative bank. Therefore, reliance was placed by the Ld. DR on the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (supra) is distinguishable on facts.
In the instant case, the amount which was invested with other co-operative societies and SCDCC bank to earn interest was not any amount due to its members. This is very clear from the submissions reproduced in the assessment order wherein the assessee has submitted that it is due to the statutory obligation to keep the reserve fund of the society in SCDCC Bank that such deposits are made, and therefore, such fixed deposit has to be maintained. Claim of the assessee in u/s 80P(2)(d) was not any liability due to its members. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a co-operative bank/other co-operative societies against which interest/dividend was earned.
At this juncture, we refer to subsequent decision PCIT Vs. Totagars cooperative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein held that, a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that in the case of PCIT & Anr. vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India [2016 (7) TMI 516 - GUJARAT HIGH COURT], held, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act.
Hon’ble Supreme Court in case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd., KSCARDB [2023 (9) TMI 761 - SUPREME COURT] relied by the Ld.DR has elaborately analysed the requirement of a cooperative bank that could fall within the exception of section 80 P(4) of the Act. Based on such principle analysed by Hon’ble Supreme Court and respectfully following the view taken in the case of PCIT & Anr. Vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India [2016 (7) TMI 516 - GUJARAT HIGH COURT] we hold that, the interest income earned by a cooperative society on its investments held with a cooperative bank that do not have licence under section 22 of the Banking Regulation Act 1949, falls outside the definition the term, ‘Banking Company” as per section 2(c ) of the Banking Regulations Act, 1949, would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act.
AO is thus directed to carry out necessary verification in respect of the that same to consider the claim of deduction u/s. 80 P(2)(d) of the Act.
As directed that in the event it is found that the interest is earned by the assessee from such commercial/cooperative banks that fall within the definition of “banking company’ as per section 2(c ), Section 5(b) and holds license under section 22 of the Banking regulation Act 1949, such interest are to be considered under the head ‘income from other sources’ however, relief may be granted as available to the assessee u/s 57 of the Act in accordance with law. With the above directions, we remit this issue to the Ld.AO.
-
2023 (12) TMI 1024
Nature of receipt - interest earned by the assessee from short term investments in unutilized funds - revenue or capital receipt - HELD THAT:- We notice that the co-ordinate bench in assessee’s own case for A.Y. 2013-14 to 2015-16 [2019 (3) TMI 1457 - ITAT MUMBAI] considered same issue thus we hold that the interest income received by the assessee is capital in nature and accordingly, not taxable under both the normal provisions of the Act as well as under section 115JB. Decided against revenue.
-
2023 (12) TMI 1023
Benami Property Transaction - Scope of provisions of Section 5 of the Amended Act, 2016 - HELD THAT:- Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals [2023 (12) TMI 620 - MADRAS HIGH COURT] cases, challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd. [2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced.
Further, it is to be noted that in the Review Petition (Civil)[2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd. delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.
-
2023 (12) TMI 1022
Direction for issuance of a detention waiver certificate - It is submitted that the delay in releasing the goods is on account of detention of the goods by respondent Nos. 1 & 2 for the purpose of investigation which lasted for almost 2 months and, therefore, the delay in releasing the goods cannot be attributed to the petitioner - HELD THAT:- The procedure for issue of “Detention Certificate” is notified in Public Notice No. 111 of 1985 dated 29.07.1985 of the Bombay Custom House issued much prior to the Handling of Cargo in Customs Area Regulations, 2009. Paragraph 2 of the Public Notice No. 111 of 1985 sets out the circumstances under which a regular detention certificate could be issued by the Customs House for facilitating the importers to get remission of demurrage charges.
Section 46 (4A) provides that the importer shall ensure the accuracy and completeness of the information given therein and the authenticity and validity of any document supporting it and compliance with the restriction or prohibition, if any, relating to the goods. It appears that on account of price difference between the supplier invoice and manufacturer invoice, the respondents are contending that the petitioner has not ensured the accuracy and completeness of the information given therein - one cannot say that the petitioner has not given accurate and complete information with respect to the price difference. The petitioner has filed the documents in support of its explanation which has not been rebutted by the respondents, and therefore reliance placed by the respondent Nos. 1 & 2 on Section 46(4A) of the Customs Act is not appropriate to deny the issuance of detention waiver certificate.
In the instant case, the demurrage could have been avoided if after removing the goods for testing, same were directed to be shifted to warehouse under Section 49 of the Act. The petitioner on 13th January 2021 sought such permission and which was immediately granted but the same could have been done when the goods were detained for investigation. Therefore, respondent Nos. 1 & 2 were not justified in not responding to various letters of the petitioner seeking waiver certificate and now to justify the same in reply affidavit. In our view, the petitioner is therefore entitled to detention waiver certificate upto the period 13th January 2021.
The respondent no. 1 has relied upon the decision of the Supreme Court in case of JINDAL DRUGS LTD. & ANR. VERSUS THE UNION OF INDIA & ORS. [2018 (8) TMI 49 - SUPREME COURT]. The Supreme Court in this case held that the revenue cannot be made liable to pay demurrage charges unless the action of the detention is palpably wrong or wholly unacceptable.
Respondent Nos. 1 & 2 to issue detention waiver certificate within a period of four weeks from today - Petition disposed off.
-
2023 (12) TMI 1021
Provisional release of perishable goods - apples - petitioner has submitted that N/N. 5/2023 was stayed by the Kerala High Court referring to some interim orders passed in other writ petitions, wherein although as fairly stated, the challenge in such petitions was not to the Notification No. 5/2023 concerning the import of apples, but to a notification on spices.
HELD THAT:- No case is made out by the review petitioner for this Court to exercise its review jurisdiction for more than one reason. The grounds as raised in the review petition, are quite alien to the orders passed by us on the proceedings of which a review is sought. Even otherwise such was not the case of the petitioner when we decided the writ petition. Further, the order passed by the Kerala High Court dated 11th July 2023 which is in the respondent’s (original petitioner’s) own case staying Notification No. 5/2023 continues to operate even today and the same has not been disputed by the review petitioner. The legal position as brought about by virtue of the stay to the notification is to the effect that the department can foist the said notification and refuse clearance of the goods (apples) by applying such notification.
Once the notification is stayed by the High Court, such order would be operational and binding on the department all over considering the well settled principles of law as laid down by the Supreme Court in KUSUM INGOTS & ALLOYS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 342 - SUPREME COURT]. Thus the department could not be heard to say that the said order passed by the Kerala High Court is not binding on the department.
Perusal of order under review makes it clear that the department refused to clear the import of apples relying on the Notification No. 5/2023 which itself was stayed by the Kerala High Court in the petitioner’s own case. Once such position had continued to operate, the review petitioner cannot argue that such stay on the said notification ought to be considered to have been impliedly vacated in the Kerala High Court adjudicating on a similar notification in relation to spices. This would be a misconceived approach on the part of the Department.
There are no merit to review orders applying the well settled principles of law in the exercise of review jurisdiction under Order 47, Rule 1 of the Code of Civil Procedure, 1908 - The Review Petition is accordingly dismissed.
-
2023 (12) TMI 1020
Non-imposition of penalty under section 114A of CA - not demanding interest from the respondent - HELD THAT:- The adjudicating authority has held that the goods are liable for confiscation and imposed redemption fine and penalty under section 112(a) of the Customs Act, 1962. Further, the adjudicating authority has relied on the judicial pronouncement of this Tribunal in the case of S.S.Impex where redemption fine was imposed @ 19.5% and penalty @ 7.8% on the value re-fixed.
There are no infirmity in the impugned order and the same is upheld - appeal dismissed.
-
2023 (12) TMI 1019
Power of the SFIO to Investigate Offences under the IPC - Powers of SFIO restricted to investigate offences under the Companies Act only - Further Investigation by the SFIO.
Power of the SFIO to Investigate Offences under the IPC - HELD THAT:- The heading of Section 219 of the Act reflects that the said provision relates to role of certain ‘related’ companies, which has surfaced during the course of investigation being conducted under Section 212 or other provisions of the Act and therefore, approval would be required in terms of Sections 219(a), (b) and (c) of the Act. The provision of Section 219(d) of the Act has to be construed by applying the rule of ejusdem generis - In the present case, it is reasonable to construe the aforesaid clauses (a), (b) and (c) of Section 219 of the Act as constituting a distinct category or class, i.e., ‘related companies’. The language and the object behind the aforesaid clauses is with respect to investigation of affairs of a company other than the company for which investigation has been ordered under Section 212 of the Act. In that context, clause (d) of Section 219 of the Act will apply to a ‘Managing Director’ or ‘Manager’ or ‘Employee’ of the company referred to in clauses (a), (b) and (c) of the said Section.
Section 219(a), (b) or (c), comes across role of Managing Director, Manager or employee of the said ‘related’ companies, then no prior approval for investigation would be required. In other words, protection has been given only to the Managing Director or Manager or employee of the company being investigated under Section 212 of the Act and not for the Managing Director or Manager or Employee of the companies being investigated under Section 219 (a), (b) or (c) of the Act. The aforesaid position is not acceptable - In the considered opinion of this Court, once an approval has been given under Section 212 of Act to investigate into the affairs of a company, the same would also relate to a Managing Director or Manager or Employee of the said company. The pre-condition of a prior approval under Section 219 of the Act applies to related companies and their Managing Director, Manager or employees as provided for in the said Section.
It is an admitted case that petitioner no. 3 was mentioned in the original order dated 03.05.2016 issued by the MCA under Section 212 of the Act. So far as petitioner no. 2 is concerned, it is the case of the SFIO that since the affairs of the company were not being investigated, therefore, no approval was required in terms of Section 219(a) of the Act - It is a matter of record that subsequent sanction has been obtained from the Central Government before filing the complaint by the SFIO in terms of Section 212(14) of the Act. Petitioner no. 2 is being prosecuted for a single transaction, as explained above. It is always open for petitioner no. 2, during the course of trial, to demonstrate that prejudice leading to a miscarriage of justice has been caused on account of not obtaining approval under Section 219(c) of the Act.
Powers of SFIO restricted to investigate offences under the Companies Act only - HELD THAT:- It is pertinent to note that Section 4(2) of the CrPC provides that investigation into offences under other statutes, like the present Act, shall be done in accordance with the CrPC unless the statute provides for otherwise. Section 212(15) of the Act provides that an investigation report filed before the learned Special Court shall be treated as a report filed by a police officer under Section 173 of the CrPC - the investigation report within the scheme of the Act will be treated as a police report, therefore, the officer filing the said report shall also be considered an officer in charge of a police station, although not specifically provided for in the said Act. The said position is further fortified by the fact that if power has been given to the learned Special Court under Section 436(2) of the Act to try offences other than those under the Act, then the power of the SFIO to investigate into such offences cannot be restricted. If during course of investigation under the present Act, the concerned Investigating Officer comes across commission of offences punishable under the IPC or any other law relating to the transactions being investigated, then the same cannot give rise to distinct proceedings. Such investigation can be carried out under Section 4(1) of the CrPC. If the report which is subsequently filed is to be treated as a police report under Section 173(2) of the CrPC, then the officer is to be considered to be vested with powers of an ‘officer in charge of a police station’.
From a conjoint and harmonious reading of the aforesaid provisions of the CrPC and the present Act, it cannot be said that the SFIO is barred from investigating an offence under the IPC.
Further Investigation by the SFIO - HELD THAT:- It is further pertinent to note that this Court has perused the record and does not find any document to show that after the learned Special Court has taken cognizance on 20.09.2022, the petitioners herein have been asked to join any further investigation by the SFIO.
The present petition is dismissed.
-
2023 (12) TMI 1018
Maintainability of section 7 application - application filed by the Appellant was clearly beyond three years and time barred or not - HELD THAT:- There is no doubt that date of default has been mentioned as 31.03.2015 on which date the account of Corporate Debtor was declared as NPA, however, the Letter of Acceptance dated 24.04.2019 has also been pleaded in Part IV - Adjudicating Authority in the impugned order has noticed the DRT Consent Terms dated 26.09.2022 and observed that fresh period of limitation shall start, hence the objection on the ground of limitation have no merit.
In so far as Consent Terms dated 26.09.2022 and fresh period of limitation thereafter, they have no relevance in the present application which was filed in the year 2021. However, the later part of the order where Letter of Acceptance dated 24.04.2019 has been noted is relevant for the purpose of limitation - The Letter of Acceptance is in the nature of agreement which is signed by all parties and amounts to fresh agreement between the parties. This fresh agreement acknowledges the debt of Rs.106,97,76,398.83/- along with interest. The Letter of Acceptance further provides that the Obligors shall jointly and/or severally to pay Rs.43,89,46,000/- along with interest towards the settlement of assigned debt due. The Letter of Acceptance which is an agreement between the parties shall give a fresh period of limitation after 24.04.2019, which is within three years of 01.11.2021, date on which Section 7 application was filed.
There shall be fresh period of limitation from 24.04.2019 and the application filed by the Appellant within three years from the said date was well within time. The Adjudicating Authority in Para 13 has also noticed the Letter of Acceptance dated 24.04.2019 for holding that objection on ground of limitation does not have any merit.
The application filed by the Financial Creditor was not barred by time and the debt and default being proved, the Adjudicating Authority did not commit any error in admitting Section 7 application. There is no merit in the Appeal - appeal dismissed.
-
2023 (12) TMI 1017
Maintainability of Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 - delivery of the goods not proved - no reply given to notice issued u/s 8 of IBC - HELD THAT:- The Tribunal appears to have been swayed only by a submission made by the Respondent that the Appellant has failed to give the proof of the delivery of goods. There is no discussion in the entire Judgement as to whether the goods were actually taken by the Respondent in its own trucks as stated by the Appellant because it is alleged by the Appellant that the Respondent lifted the goods from the Port to its Plant. Furthermore, various other evidence which may prove the transactions having been taken place between the Parties have not been discussed at all by the Learned Tribunal much less the fact that if no contest is made till the filing of the Petition, whether it can be raised for the first time in the Reply filed to the Application under Section 9 is also a question which requires to be answered.
This is one such case in which interference is required for the purpose of looking into the entire evidence by the Tribunal and recording a finding thereafter as to whether the Application has to succeed or to fail.
The Impugned Order is set aside. The matter is remanded back to the Learned Tribunal to decide the Application again after taking into consideration the entire evidence on record.
-
2023 (12) TMI 1016
Possession of goods - lien of the Appellant on the goods as a bailee - waterfall mechanism - main plank of argument of the Appellant is Section 171 of the Act on the basis of which it is claimed that the Appellant should have been declared as a secured creditor and should have been included in the list of stakeholders for the purpose of distribution in terms of Section 53 of the Code - HELD THAT:- Section 3(30) of the Code defines secured creditor which means a creditor in favour of whom security interest is created. Section 3(31) deals with security interest which means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person. Provided that security interest shall not include a performance guarantee. Section 3(4) deals with ‘charge’ means an interest or lien created on the property or asset of any person or any of its undertakings or both as the case may be as security and includes a mortgage.
The wharfingers as the Appellant claiming itself to be a security for a general balance of account any goods bailed to them whereas in the present case, the goods are not in possession of the Appellant which is also admitted by the Appellant during the course of hearing and thus there was no actual lien to invoke Section 171 of the Act.
There are no error committed by the Adjudicating Authority in passing the impugned order and as such the present appeal is found without merit and the same is hereby dismissed.
-
2023 (12) TMI 1015
CIRP - Renewal of Bank Guarantee for customs duty exemption - Whether the Adjudicating Authority was justified in concluding that the Customs Bank Guarantees are not essential for the ‘Going Concern’ nature of the Corporate Debtor Company? - HELD THAT:- It is an admitted fact that the MPP status is important since it provides an exemption of Customs Duty - there are force in the contention of the Learned Counsel for the Respondent that since there are no goods being imported by KMPCL or its contractor, being SEPCO, from China during the CIRP of KMPCL, for the operationalisation of the units of KMPCL, there is no exemption which KMPCL can claim for customs duty liability and therefore, the Respondent has intimated the CoC that these renewals are not necessary for the ‘Going Concern’ nature of KMPCL.
A perusal of the Minutes of the Meetings dated 14.10.2020, 22.10.2020 and 19.09.2022 of the CoC evidence that the Respondent had informed the Appellants that the renewal of the Customs Bank Guarantees would only increase the financial burden of KMPCL which would have to bear the commission charges and renewal charges which are exorbitant amounts. It is also significant to mention that the Deputy Commissioner, Paradip Customs Division filed a claim dated 04.11.2019 with the IRP / RP of KMPCL stating that an amount of Rs. 7,19,98,48,660.49/- was payable by KMPCL as per the assessment Order.
When there is no guarantee with respect to the MPP status of the Non-Operational Units and since there are no goods being imported by the Corporate Debtor Company as it is undergoing CIRP, there is no exemption which the Company can claim for Customs Duty liability and we are of the earnest view that the Corporate Debtor Company need not be burdened with the Commission and renewal charges approximately amounting to Rs. 70 Crores which would only increase the financial burden of the Corporate Debtor Company with no positive benefits accruing. Under Section 25(1), the RP is empowered to reject the CoC proposal for renewal of the Bank Guarantees provided by the Corporate Debtor Company, prior to the initiation of the CIRP as renewing those would not consequently lead to any advantage or any valuable gains.
There are no substantial grounds to interfere with the well-considered order of the Adjudicating Authority - appeal dismissed.
-
2023 (12) TMI 1014
Dismissal of application under Section 7 of IBC, for the resolution on the ground of limitation - the order was upheld by this Tribunal but the Hon’ble Supreme Court set aside the order of this Tribunal and remanded the appeal back to this Tribunal and restored the same, permitting the financial creditors (Bank) to file an application to amend Section 7 application - HELD THAT:- The fact remains that while allowing the appeal, the Hon’ble Supreme Court has remanded the appeal and restored the same to this Tribunal and permitted the present Respondent (FC) to make amendment in the application filed under Section 7 of the Code. It is no where mentioned by the Hon’ble Supreme Court that the application had to be filed before the Adjudicating Authority. Since, the matter was pending before the Adjudicating Authority at that time, after restoration of the appeal by the Hon’ble Supreme Court, the application has rightly been filed before this Tribunal for seeking amendment in Section 7 application.
In so far as, the allegation of the Applicant that some application was also filed before the Adjudicating Authority for amendment, firstly, it was only a memo and secondly, no proceedings were pending at that time before the Adjudicating Authority, therefore, the application has rightly been filed before this Tribunal where the proceedings were pending and there is no error in the statement made by Counsel which has been recorded in the order dated 11.01.2022 which is sought to be labelled as fraudulent.
As a matter of fact, the application under Section 7 was admitted on 05.06.2023 which was further challenged by the present applicant by way of an appeal i.e. CA (AT) (Ins) No. 184 of 2023 and dismissed with a detailed order on 16.10.2023, therefore, the only recourse available to the Appellant is to challenge the order dated 16.10.2023 by way of further appeal but in so far as the recalling application is concerned, it is totally misconceived and the same is thus hereby dismissed.
-
2023 (12) TMI 1013
Oppression and mismanagement - Application for continuation of interim stay dismissed - appointment of a Chief Operating Officer - Article 69 of the Articles of Association of the Respondent No. 1 Company requiring unanimous consent of all directors - appointment of more than 1 (one) director on the board of Respondent No. 1 Company - Appointing an independent director on the board - Removing Respondent Nos. 4 to 6 from the Board of Directors of the Respondent No.1 Company and directing Respondent No. 2 Company to nominate 1 (one) person after providing and obtaining approvals of the credentials of such person - restraint from interfering with the day-to-day functioning and management of the affairs of the Respondent No. 1 Company - ensuring clear separation between the persons nominated on the board of the Respondent No. 1 Company or any other person having access to Respondent No. 1 Company and its information - Restraining Respondent Nos. 2 to 9, their principals/directors, their promoters, managers, assigns, successors-in-interest, licensees, franchisees, sister concerns, representatives, servants, distributors, agents, etc. and/or any person or entity acting for them from entering into any contract of supply/ services or otherwise with the Respondent No.1 Company - Section 241 & 242 of the Companies Act, 2013.
HELD THAT:- It is needless to mention that the main petition filed under Section 241 and 242 of the Act is pending for hearing on 01.02.2024. It is also borne out from the record that initially when stay was granted on 04.09.2023 it was observed that if the board of directors takes a decision to appoint Shri MSM Mujeebur Rahuman as COO, the said decision shall be kept in abeyance till 12.09.2023 and then the Appellant chose to file the application bearing I.A. No. 263 of 2023 in which the only prayer made is for extension of the order dated 04.09.2023. It is pertinent to mention that this order was extended by the Tribunal up to 28.11.2023 but by that time the appeal was filed not only the order became inoperative but also the Respondents appointed Dr. MSM Mujeebur Rahuman as COO who is working as such and no application has been filed until now about his act and conduct.
It is also a matter of fact that the Tribunal fixed the case for hearing on 05.12.2023 i.e one after the order dated 28.11.2023 was passed for the purposes of hearing the main petition in terms of the observation made in para 49 which is mentioned hereinabove, however, instead of arguing the case on merit itself on 05.12.2023 the Appellant got the main petition adjourned for 01.02.2024 on the pretext that the appeal has been filed which was only against an interim order.
In such a situation, where the court has to thoroughly scan voluminous record and also interpret various articles of the AoA, it would be just and expedient if the main petition itself is heard and decided, as proposed by the Tribunal who has rightly not made any observation about the interpretation of Article 69 which is the main plank of the argument of the Appellant in the interim application and the main petition, therefore, this appeal is disposed off with liberty to the Appellant to file an appropriate application before the Tribunal for preponement of the hearing from 01.02.2024 to an early date by making reference to Para 49 of the impugned order and in case any such application is filed, the Tribunal shall consider the said request and prepone the date of hearing and decide the main petition filed by the Appellant as early as possible.
-
2023 (12) TMI 1012
Admissibility of Section 7 application - date of default in the Section 7 Application - bar u/s Section 10A of IBC - right of Debenture Holders to initiate proceedings under Section 7 of the Code - competency of Facility Acceleration Notice.
Whether the Application filed by the Financial Creditors under Section 7 of the Code was hit by Section 10A of the Code? - HELD THAT:- The Law is well settled that no application for initiating proceedings under Section 7 can be initiated for default which is committed during Section 10A period - It is well settled that when default is committed during Section 10A period and subsequent to Section 10A period, application is fully maintainable for any default subsequent to Section 10A period - The Application under Section 7 being filed for default which was on basis of default occurred subsequent to Section 10A period, it is opined that application was not hit by Section 10A.
Whether the Debenture Holders have right to initiate proceedings under Section 7 of the Code? - HELD THAT:- It is already noticed that Altico i.e. majority Debenture Holder has already initiated Section 7 proceeding hence all Debenture Holders were unanimous in their view to proceed against the Corporate Debtor and this Tribunal upheld the initiation of proceeding against the Corporate Debtor by the Financial Creditors.
Whether the Facility Acceleration Notice dated 30th May, 2021/31st May, 2021 was incompetent and not in accordance with Debenture Trust Deed dated 19th March, 2018? - In event, Facility Acceleration Notice dated 30th May, 2021/31st May, 2021 is held to be not in accordance with Debenture Trust Deed, whether the Application under Section 7 deserves to be dismissed? - Whether the Order passed by the Adjudicating Authority admitting Section 7 Application needs interference in this Appeal? - HELD THAT:- From the facts and sequence of events as noticed, it is clear that the facility acceleration notice issued by the Debenture Holders cannot be said to be in accordance with the Debenture Trust Deed. The notice was not issued by Debenture Trustee and issued by Debenture Holders - having held that Facility Acceleration Notice was not issued in accordance with the terms and conditions of Debenture Trust Deed, the next question to be considered is as to whether after the aforesaid holding whether the Section 7 Application deserves dismissal.
While noticing the clauses of Debenture Trust Deed, it is noticed that Debenture Trustee has to initiate proceeding after occurrence of event of default in pursuance of the approved instructions by the Debenture Holders has to be obtained in meeting with fifty percent vote share as per the clauses of Debenture Trust Deed as noticed above. The Financial Creditors who have filed Section 7 Application were minority debenture holders having only 29.8 percent. Majority Debenture Holder is the Altico Capital. In the Reply which has been filed by the Financial Creditors it has been pleaded that Altico the majority NCDs holder had already initiated proceeding under Section 7 of the Code against the Corporate Debtor - The fact remains that majority Debenture Holder having already initiated Section 7 Proceeding, all debenture holders are unanimous in their actions to proceed against the corporate debtor for the defaults committed. It is already held while considering Question no. i that application under Section 7 was not hit by section 10A since the application under Section 7 was not confined to the default committed during Section 10A period rather the Application was filed on the basis of date of default dated 01st June, 2021 consequent to Facility Acceleration Notice dated 30th May, 2021 and 31st May, 2021 as well as other defaults as explained in Section 7 Application.
If 1st June, 2021 is not taken as date of default, the default on the payment of interest after end of the 10A period i.e. after 24th March, 2021 there is clear default on the payment of interest and payment of default in the interest of both the Financial Creditors is more than Rs. 1 Crore which is threshold amount for filing of the Application under Section 7 - The tabular chart given in Exhibit K contains the details of interest accrued interest paid and interest outstanding even if we take period after 10A period i.e. period from 31st March, 2021 as mentioned in the tabular chart total overdue interest after 10A period is much more than threshold amount of Rs.1 Crore. Details of overdue interest has been captured in the tabular form in exhibit K - The date of default in payment of interest after there are several date of default in payment of interest after Section 10A period which is captured in the tabular form filed as Exhibit K in Part-IV of the Application, Financial Creditors have also filed the working for computation of the amount and days of default in tabular form thus the date of default cannot be confined only to date 1st June, 2021 as mentioned in Part-IV. The date of default which is mentioned in the tabular form cannot be ignored it is clear that there was default of more than Rs.1 Crore i.e. threshold period in payment of default by the Corporate Debtor after Section 10A period.
The above default is very much there even if the default is ignored on the basis of Facility Acceleration Notice dated 30th May, 2021/31st May, 2021 - even after Section 10A period there being default in payment of interest which was more than threshold amount, the Application under Section 7 deserves to be admitted - the order of the Adjudicating Authority admitting Section 7 Application need no interference in this Appeal.
Appeal dismissed.
-
2023 (12) TMI 1011
Maintainability of appeal - appeal dismissed on the ground of being filed beyond the period of limitation - cessation of right of petitioner to get legitimate relief which involves a wide range of legal interpretations as well as involves the same question of law for the previous and subsequent assessment years, for which the same elucidation is involved - compliance with the principles of natural justice or not - HELD THAT:- Under normal circumstances this Court would not exercise any discretion in the matter on account of clear statutory mandate for fixing time limit for preferring an appeal before the Commissioner of Appeals. However, considering the fact that the appellant is a local authority and the issues which have been the subject matter of adjudication before the authority culminating in an order dated 24th August, 2017 are all recurring issues, the appellant, in our opinion, should be granted one opportunity to agitate their contentions so that a decision on merits is arrived at rather non-suiting the appellant municipality on a technical ground. This discretion cannot be exercised in all cases and this Court is of the view that the case on hand is a rare case where the municipality is contesting demand raised by the Service Tax Commissionerate. That apart, in all probabilities the appellant would have complied with the pre-deposit condition while preferring the appeal before the learned Tribunal.
The order passed by the learned Tribunal as well as the order passed by the Commissioner of Appeals is set aside and the appeal stands restored to the file of the Commissioner of Appeals, Siliguri - Appeal allowed.
............
|
9911796707
