Application for advance ruling u/s 245R - Whether application cannot be allowed if the question raised in the application is already pending before any Income-tax authority or Appellate Tribunal? - notice under section 143(2) was for scrutiny under computer aided scrutiny selection (CASS) and the only reason for selection was "refund claim" - HELD THAT:- The applicant has categorically stated that neither the notice under section 142(1) of the Act nor any questionnaire was received prior to the filing of the present application. AO might have examined all the aspects, including the issues raised in the present application, while examining the issue of "refund claim" for which the case was selected for scrutiny. But the fact remains that such issues were not raised by the AO before filing of the present application. In the absence of any specific question in respect of the issues raised in the present application, it cannot be concluded that the questions raised in the present application was already pending before the Income-tax authority. The general notice as issued in this case is found to be insufficient to attract the rejection of the application under clause (i) of the proviso to section 245R(2) of the Act.
In the present case the notice was issued in a standard preprinted format and the specific issues as appearing in this application were not part of the said notice. The hon'ble Delhi High Court has also held in the case of Sage Publications Ltd., U.K. [2016 (9) TMI 299 - DELHI HIGH COURT] that issue of notice under section 143(2) even prior to filing of application before the Authority for Advance Rulings, ipso facto would be insufficient to attract automatic rejection of the said application under the proviso to section 245R(2) of the Act and the special leave petition filed against this decision was dismissed by the apex court.
Thus the notice under section 143(2) was issued in response to computer aided scrutiny selection reason of "refund claim". The specific question in respect of strategic alliance agreement entered into by the applicant with PVR was never raised by the Assessing Officer in any of the notices or the questionnaire issued before the filing of the present application. As held by the hon'ble court such notice cannot attract the automatic rejection route under clause (i) of the proviso to section 245R(2) of the Act as the questions raised in the present application are not found pending before the Income-tax authority.The application is admitted under section 245R(2).
Revision of the approved Resolution Plan - Adjudicating Authority observed that the contention of the Appellant that it had no knowledge of the financial condition of the Corporate Debtor cannot be entertained - HELD THAT:- Having regard to the Judgments rendered by this Appellate Tribunal holding that the Successful Resolution Applicant cannot be permitted to withdraw the approved Resolution Plan coupled with the fact that the Appellant in the instant case being the sole Resolution Applicant in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor which has been classified as an MSME and admittedly having knowledge of the financial health of the Corporate Debtor as a promoter or a connected person cannot be permitted to seek revision of the approved Resolution Plan on that ground which would not be a material irregularity within the ambit of Section 61(3) of the Insolvency and Bankruptcy Code, 2016.
Taking into consideration the fact that the Corporate Debtor is an MSME and there is economic slowdown globally in the wake of outbreak of COVID-19 Pandemic, it is deemed appropriate to waive off the costs imposed by the Adjudicating Authority - Appeal dismissed.
Seeking grant of pre-arrest bail - fake/bogus Tax invoices without supply/movements of goods - offence 132(5) read with 137 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Upon perusal of the reply filed by the prosecution and the documents placed on record, it would reveal that prima facie there is force in the allegations made against the applicants. The statement of co-accused Mahesh Kinger speaks volume. Considering these allegations, it can be said that unless the investigation officer gets an opportunity to unearth the facts, he will not be in a position to reach to the proper conclusion.
Involvement of applicant No.2 in the present crime - HELD THAT:- Upon perusal of the statement of applicant No.2 it would reveal that she has signed the balance sheet of the company, invoices, RTGS documents, and Cheques. This goes to suggest prima facie involvement of applicant No.2 in the business of the Company. Thus, I do not find merit in the submission of the learned advocate for the applicants.
There are no merit in the contention raised in the application that the applicants have been falsely implicated and that there is no need of custodial interrogation. On the contrary, considering the facts and circumstances of the case and the fact that there are allegations of evasion of huge taxes, if an anticipatory bail is granted to the applicants, that would certainly adversely affect the investigation.
Application for pre-arrest bail - wrongful availment and passing on of input tax credit or not - serious allegations against the applicant in respect of evasion of tax - HELD THAT:- Upon perusal of the allegations made against the applicant it is prima facie revealed that the applicant has supplied goods without invoices and that issued invoices but without supplying goods in contravention of the provisions of the GST Act. Upon perusal of the objection taken by the respondent, it is crystal clear that the applicant is not interested to co-operate the investigating agency.
Not only this the prosecution has specifically quoted the incident dated 18.11.2020 stating that on that day, the statement of the applicant was recorded but the applicant without signing the statement and the permission of the Investigation Officer had left the premises. The statement has not been controverted by the applicant by filing counter affidavit. This shows the attitude of the applicant that he is not interested to extend co-operation to the Investigation Agency.
Thus, if the bail as claimed by the applicant is granted in his favour in that case certainly it would adversely affect the further investigation - In view of the observations and the allegations made against the applicant, no case is made out for exercising discretion for grant of pre-arrest bail.
Maintainability of petition - instead of filing appeal, petitioner has filed this petition beyond limitation period - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA & ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in the matter.
Maintainability of petition - instead of filing appeal, petitioner has filed this petition beyond limitation period - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA & ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in the matter.
Maintainability of petition - instead of filing appeal, petitioner has filed this petition beyond limitation period - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA & ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in the matter.
Maintainability of petition - instead of filing appeal, petitioner has filed this petition beyond limitation period - HELD THAT:- The Hon'ble Supreme Court of India in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA & ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in the matter.
Permission to withdraw the petition - availability of effective alternative remedy to challenge the impugned order by way of revision under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- These Writ Petitions are dismissed as withdrawn with liberty to resort to the required procedure. It is made clear that for the purpose of reckoning limitation for availing the aforesaid remedy, the period from the date of filing of the Writ Petition, viz., 22.11.2018, till the date on which the certified copy of this order is made ready by the Registry, shall be excluded.
Seeking to proceed against the secured property involved - recovery of dues - validity of attachment made by the respondents subsequent to creation of equitable mortgage created in favour of the petitioner - effect on marketability - whether the State has better right over the secured assets for recovery of its dues? - HELD THAT:- This question is no more res integra. The petitioner has rightly relied on the judgments of this Court in TRAVANCORE DEVASWOM BOARD VERSUS LOCAL FUND AUDIT [2020 (5) TMI 691 - KERALA HIGH COURT] and STATE BANK OF INDIA AND ORS. VERSUS STATE OF KERALA AND ORS. [2019 (7) TMI 1684 - KERALA HIGH COURT] where it was held that the sale carried out either under the SARFAESI Act or under the RDB Act takes precedence over the statutory charges due to the Government created under KVAT Act or under other State Enactments after the Amendment Act of 2016. A secured creditor in whose favour a security interest has been created thus has priority in sale and payment over all other statutory charge holders.
Section 26E of the SARFAESI Act and Section 31B of the RDB Act create a 'First Charge' by way of a priority to the Banks/Financial Institutions to recover and satisfy their debts, notwithstanding any statutory 'First Charge' in favour of the Revenue.
Under-statement of income - addition on account of lumpsum leasing charges received by the assessee - Lease deed is unregistered one - tribunal deleted the addition - HELD THAT:- Tribunal has decided the aforesaid issue in favour of the assessee on the basis that the lease rentals have been consistently offered to tax and the revenue cannot take any inconsistent stand.
As submitted by revenue that the aforesaid lease on which reliance has been placed by the Tribunal is unregistered , the same has not been taken into consideration by the Tribunal. Therefore, the matter needs to be remitted to the Tribunal to consider the substantial question of law involved in this appeal afresh.
The order passed by the Tribunal is hereby quashed. The matter is remitted to the Tribunal to consider the substantial question of law involved in this appeal afresh, in accordance with law.
Validity of attachment and auction notice - Section 26E of the Act and Section 31B of the Bankruptcy Act - right of the petitioner to yield to crown debt coupled with charge is sustainable or not - HELD THAT:- A reading of provisions of law makes it abundantly clear that the said provisions are analogous though under two different legislations. Section 26E of the Act, which came into force w.e.f 24-01-2020 begins with 'non obstante' clause and stipulates that after registration of the security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central or State Governments or local authority. Section.31B of the Bankruptcy Act is also to the same effect. When the language of the provisions of law is very lucid and clear, no other interpretation is possible.
In the instant case, the 3rd respondent created mortgage over the subject property by way of a registered deed in favour of Andhra Bank as long back as on 16-03-2013 and as the account of the loanee became NPA on 31-07-2016, the Bank authorities initiated action under the provisions of the Act by issuing notices under Section 13(2) and (4) of the Act. It is absolutely not in controversy that the petitioner herein clearly falls under the definition of "secured creditor" as defined under Section 2(zd) of the Act, since the petitioner herein is an Asset Reconstruction Company in whose favour Andhra Bank assigned the debt by way of registered document on 26-09-2017 - Having regard to the language employed in Section 26E of the Act and 31B of the Bankruptcy Act, the contention of the learned Government Pleader that mortgage in favour of the petitioner herein should yield to crown debt coupled with charge cannot be sustained in the eye of law.
Submission of the learned Government Pleader that since the petitioner-institution did not take any steps pursuant to the assignment of debt in its favour, it is liable to be non-suited, is also not tenable having regard to the above said provision of law - this court has absolutely no scintilla of hesitation to hold that the impugned action is neither sustainable nor tenable in the eye of law.
Admission of application filed under section 7 of IBC - ex-parte Order was admitted - HELD THAT:- There was no response at all from the side of the present applicant even after service of notice at the address recorded in the applicant Company Master Data, this Tribunal admitted the main Company Petition.
This Tribunal, being a Quasi-Judicial Authority, has no power to review or set aside its own Company Petition Admission Order as per settled proposition of Law. Hence, the prayer made in this IA to set aside the Order of Admission of the Application filed under Section 7 of IBC by this Bench on 18.03.2020, is not legally sustainable and accordingly stands rejected.
Application for setting aside the order of admission is dismissed.
The National Company Law Tribunal, Chennai allowed the urgent application IA/691/IB/2020 for hearing IBA/393/2020. Learned Senior Counsel for Applicant Mr. Krishna Srinivasan and Learned Counsel for Respondent Mr. Narasimha Varman were present through video conferencing platform.
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment under the terms of the Construction Contract - Operational Creditors - petition for recovery of debt - existence of debt and dispute or not - HELD THAT:- The two sides have been in constant communication with regard to the recovery of the debt, till very recently and the negotiations have not concluded. The Corporate Debtor has shown willingness to pay and has made an offer. Further, it is seen that out of the total project cost of ₹ 103,97,89,507, the net payable amount was calculated at ₹ 12,45,89,866, and finally the total amount remaining payable is only ₹ 6,98,47,408. That is, a substantial part of the debt has already been recovered by the Operational Creditor. Thus it is obvious that this is a clear case of the Operational Creditor pursuing recovery and through the present Petition is seeking the assistance of this Tribunal in its effort to recover the balance amount. This Tribunal and the IBC cannot be used as a recovery mechanism. This is clearly not the object of the Code.
The real estate sector has badly affected, resulting in incomplete projects and home buyers’ suffering in the process. In the instant case, the demand as per the revised terms of payment was to be paid in instalments on 15.02.2020, 30.04.2020 and 30.06.2020. Of these the second two instalments fall in the period of the Lockdown when business was at its lowest ebb. Major decisions had to be taken be taken by the Government to revive business, to inject economic stimulus, enable restructuring of debts, introducing modifications and suspension of various provisions of the Code, extending limitations of time etc.
In this bleak scenario, it cannot be known whether it would be fruitful to push the Corporate Debtor into CIRP, or into liquidation if no Resolution Applicant comes forward. That would be against the objects of the Code.
The Petitioner and the Respondent have been negotiating the terms of payment till very recently and the same are still on. The Corporate Debtor is willing to pay, only the terms are to be settled keeping in mind the present economic scenario. Hence, the Petition appears to be not only for recovery of debt but is premature. It would be in the interest of justice to allow the Corporate Debtor a few more months to clear the debt or settle the matter with the Petitioner - Petition disposed off.
Scheme of Amalgamation - seeking holding, convening and dispensation with various meetings - sections 230-232 of the Companies Act, 2013 read with Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding, convening and dispensation with various meetings issued - directions regarding issuance of various notices also issued.
Giving on lease of Oxygen plant to respondent - Obligation to pay rent on part of the respondent as per the Lease Agreement - seeking restraint on Respondent from utilizing the Leased Equipment situated at the integrated steel plant, Meramandli, Odisha without making payment of the Lease rentals - seeking to direct respondent to immediately pay the entire defaulted amount - mail plea is that the entire transaction leading to the lease agreement is not at arm's length - pending arbitration proceedings - HELD THAT:- There is a clear stipulation in the Lease Agreement for payment of lease rent at ₹ 15 Crores till March 31, 2020 and ₹ 18 Crores w.e.f. April 01, 2020, the said agreement is an admitted document of the parties. It is also an accepted position that the respondent is using the Oxygen Plants. The lease rentals received from the respondent are utilised for servicing the loans taken by petitioner from the Lenders and there is obligation to pay the GST/TDS to the concerned authorities as well. If that be so, there is a prima facie liability on the respondent to pay to the petitioner/Lenders for the usage of the Oxygen Plants in the manner stipulated in the Lease Agreement i.e., Clause 5.1 read with Schedule 2.
Despite specific obligation, the petitioner has failed to undertake routine maintenance measures of the Oxygen Plants and keep the same in good working condition in accordance with best industry practice.
There is a dispute between the parties as to who is responsible for the upkeep of the Oxygen Plants. Prima facie, Dr. Singhvi and Mr. Nigam are right in relying on Clause 6.1.(vii) of the Lease Agreement and Clause 6.1.7 of the Common Loan Agreement that the obligation in on the petitioner, but there is a dispute as to whether the Oxygen Plants actually required any maintenance.
It is clear that ₹ 18 crores being the contractual amount w.e.f. April 01, 2020, the said amount is prima facie payable by the respondent atleast till such time the parties seek adjudication of the disputes as per the contractual provisions - So, it is directed that the respondent shall pay the arrears of lease rent (net of all taxes/TDS), after adjusting the amount already paid, to the lead Lender Bank with applicable interest within six weeks from today.
TP Adjustment - Comparable selection - negative working capital adjustment - HELD THAT:- Referring to assessee ITeS company companies functionally dissimilar with that of assessee.
Negative working capital adjustment - There is no allegation in the case of the assessee that the assessee has used any borrowed fund for working capital or there is any risk of money lost in credit time provided to the customers. Accordingly, we hold that negative working capital adjustment is not justified in the case of the assessee.
Inclusion of ICRA Online Ltd. - CIT(A) has analyzed the functional details and come to the conclusion that ICRA Online Ltd. is a Knowledge Process Outsource (KPO) company which is different from Business Outsource Company (BPO) which is the line of business of the Assessee in the present case. Hence, we uphold the exclusion of this company from the list of comparable companies.
I-Gate Global Solutions Ltd.- We uphold the exclusion of this company from the list of comparable companies by applying the turnover filter.
Determining ALP under TNMM - As correct approach would be to look at the costs incurred by the assessee only and should not impute any additional cost as done by TPO, which indirectly enhances the ALP artificially. The contrary view expressed in decision cited by the learned DR takes the view that Working capital adjustment is required in all cases as any credit extended to customers will result in cash locked up and will result in the assessee borrowing money from the banks and incur additional cost towards interest on these borrowings which cost will have effect on the price charged.
It is the reasoning in these decisions that under TNM method that every ingredient of profit margins of comparable companies are analysed, whether it is positive or negative. The decision proceeds on the basis of effect on price owing to working capital requirement. We are of the view that working capital adjustment itself is computed on the basis of outstanding current assets and liabilities at the year end. It means that other things being equal, an entity having higher working capital will incur more interest cost which will reduce profitability. Hence no importance shall be given to pricing aspect. Since the assessee does not have any working capital risk, the question of negative working capital does not arise.
Maintainability of application - sale of paratments - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - provisional allotment of an under construction of apartments - HELD THAT:- Issue notice.
Counter affidavit, if any, be filed within a period of four weeks from today - List the appeal on 27 January 2021.
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time limitation - HELD THAT:- It is not in dispute that all the supply has been made by the Operational Creditor in the month of July 2015. It is also not in dispute that the Operational Creditor is operating in business to business segment i.e. it is not in case where such supplies are being made to numbers of clients on specific date or from different locations. Therefore, there are no substance in the claim of the Operational Creditor that date of Invoice and number of Invoice could not matched. Even, otherwise, the supply has been made in the month of July 2015, as stated earlier, and the application has been filed on July 18, 2019, hence, aspect of limitation is to be seen.
No material has been brought on record to show that name of the Corporate Debtor has been changed. In view of the fact that the Corporate Debtor has attached its Annual report for 2018-19 in the name and style of M/S, Girdharilal Sugar and Allied Industries Limited, the name of the Corporate Debtor remained the same, Therefore, the said payment could not be said to have been made by the Corporate Debtor. Even otherwise a paltry payment, assuming to have been made by the Corporate Debtor, cannot extend the limitation period for all debts as each supply is an independent contract. The said petition is, therefore, not maintainable.
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