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Showing 21 to 40 of 1621 Records
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2016 (5) TMI 1608
Jurisdiction - competent cort to enforce Arbitral Award - Prayers of the appellants for examination of the judgment-debtors, by summoning the judgment-debtors to this Court declined.
Whether this Court is the appropriate Court of competent jurisdiction, to enforce an arbitral award under the 1996 Act?
HELD THAT:- By virtue of the forum selection clauses and a printed clause in the agreement indicating that the agreement was executed within the jurisdiction of the Court agreed upon, applications are filed in the Court of the choice of the financer as specified in the agreement for injunction and for appointment of Receivers in respect of assets financed to borrowers in different parts of India.
Numerous such applications are filed in this Court. More often than not, the agreements are signed by the borrowers hundreds of miles outside the jurisdiction of this Court, through agents and even branch offices, even though the head-office and/or the registered office of the finance companies might be situate within the jurisdiction of this Court - All that might have been done within the jurisdiction of this Court, could very well be the affixation of the signature of the official of the financier and may be affixation of the seal of the financier. Applications are moved in this Court ex parte for injunction and orders of injunction are obtained. Middle income group borrowers defaulting in payment of instalments seldom appear to contest the proceedings, may be due to financial constraints or inconvenience otherwise of defending proceedings in a distant Court.
Moreover, it is often seen that finance companies have their chosen arbitrators, who arbitrate disputes between the financiers and borrowers in bulk. By recourse to fine print terms exorbitant amounts are charged by way of cheque bouncing charges, which are many times the amount charged by banks for the bouncing of cheques, as noted by the leaned single Bench.
When a contract appears to be unconscionable, the Court may intervene. It is for the Courts to ensure that no injustice is done to the financially weak. Similarly it is for the Court to exercise restraint before passing unduly harsh orders - A forum selection clause is not in itself unconscionable. The borrowers enter into agreements containing forum selection clauses with their eyes open, and also default in making payment as per agreement.
The features noted by the learned single Bench in some of the awards of which execution has been sought, ex facie render these awards liable to be set aside on the ground of the same being against public interest. The limitation for filing an application for setting aside of the award would only start running from the date of receipt by the borrower and/or the guarantor of a copy of the award duly signed by the arbitrator. If an award is found ex facie unsustainable in law, the Court might decline to execute the award - However, where an application had earlier been filed in this Court, the Court cannot refuse to execute the award on the ground that the judgment-debtor and/or the assets were located outside the jurisdiction of this Court.
Appeal allowed.
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2016 (5) TMI 1607
Seeking consideration of the miscellaneous application before BIFR - HELD THAT:- Writ petition was filed inasmuch as BIFR was not functioning and impugned order dated January 07, 2016 passed by AAIFR was that since no appeal was pending before it, the question of entertaining any miscellaneous application would not arise - When the writ petition was filed, on account of superannuation of the members constituted BIFR, the Board was not functioning. As of today, the Board is functioning because two members have been nominated.
In that view of the matter relief as prayed in the writ petition cannot be granted but a direction is issued that within three months from today BIFR should decide MA No.358/BC/2014.
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2016 (5) TMI 1606
Rejection of plaint for want of a cause of action - averments in the plaint indicate that this is a composite suit where the plaintiff has sought reliefs of recovery of the money claimed against the defendants on contract as also by way of damages being a liability under the torts - Order 7 Rule 11 read with Order 1 Rule 10(2) of the Code of Civil Procedure - It is the case of the Plaintiff that there were defaults committed on the plaintiff's exchange by Defendant No. 1 and the same have occurred with the active participation, knowledge and connivance between the defendants.
HELD THAT:- A holistic reading of the plaint would demonstrate that the plaintiff has impleaded defendant Nos. 14 and 15 who were directors and shareholders of defendant No. 4 so as to seek a relief against these defendants. The plaintiffs have made averments in the plaint that at the relevant time defendant Nos. 14 and 15 were in-charge and responsible for the affairs of defendant No. 4 and as such they were also liable to jointly and/or severally pay amounts due from defendant Nos. 1 to 4 to the plaintiff which was in fact the moneys of the counter-parties dealing on the exchange as set out in para 7 (zz) of the plaint. It is pertinent that the plaintiff in para 7 (zz) of the plaint has made categorical averments that defendant Nos. 1 to 4 in collusion with erstwhile managing director of the plaintiff and some of the managerial staff who directly reported to him, have orchestrated and played a fraud on the plaintiff and counter parties to the outstanding trades, by seeking to represent and assure that the commodities held thereunder have been duly deposited in warehouses designated by the plaintiff which representations were false to their own knowledge and which were deliberately and with an intent to defraud the plaintiff and counter parties and have thereby caused the counter-parties to part their moneys and enter into outstanding trades on the basis of such fraudulent representations and assurances and further have compounded the fraud so played by refusing an access to the designated warehouses for parties of accepting commodities that were purportedly deposited and/or taken possession thereof for the purpose of sale and realization of the amounts due from defendant Nos. 1 to 4 under outstanding trades.
The plaintiff have stated that defendant Nos. 1 to 4 in connivance with defendant Nos. 5 to 16 would deal with the assets in their control and possession and therefore, exhaust monies and/or assets in such a manner to defeat the claim of plaintiff's exchange. It is stated that defendant Nos. 5 to 16 as Directors/shareholders are in effective control of defendant Nos. 1 to 4 and are therefore, in-charge of day-to-day affairs of defendant Nos. 1 to 4 and that enquiry of the Economic Offences wing clearly indicates that persons in charge of defendant Nos. 1 to 4 have utilized their monies for ulterior motives and/or are seeking to defeat and defraud the claim of the plaintiffs. This was borne out by the fact that the Economic Offences wing had arrested Mr. Surendra Gupta Managing Director of defendant No. 1.
From the reading of the plaint, thus it is borne out that although a contract was between the plaintiff and defendant No. 1, defendant Nos. 2 to 4 had also a role to play in the transactions being related companies of defendant No. 1. The defendant Nos. 2 to 4 are largely controlled by the same management. The defendant No. 1 admittedly had executed various trades in commodities for itself and on behalf of its clients including defendant Nos. 2 to 4 on the plaintiff's exchange - The specific allegation is that defendant Nos. 1 to 16 had already disposed/siphoned/shifted off the commodities located in the warehouses whereby committed a grave breach of trust and thereby willfully defaulted towards its obligations on the plaintiff 's exchange. The plaintiff have further stated that this large scale defaults and fraud was also a subject matter of investigation of Economic Offences wing (EOW). Articles appeared in newspapers on this investigation of the EOW which further high-lighted that defendant Nos. 1 to 4 and their management namely defendant Nos. 5 to 16 were responsible for siphoning the amount outstanding to the plaintiff. The case of the plaintiff that these acts of defendants committing fraud on the plaintiff's exchange could not have occurred without the knowledge and active participation of the defendants.
The present case is not a case which merely rests on the contractual terms but according to the plaintiffs, it is a collusion fraud and the defendants becoming beneficiaries of such acts. It is for these reasons, the normal role of a Director in the normal course, as canvassed on behalf of the defendant Nos. 14 and 15/Appellant would not become applicable in the facts of the present case. In considering such pleas, the facts and circumstances as borne out in the pleadings in each case are required to be considered so as to determine as to whether any cause of action is made out or otherwise before exercising power as conferred under Order 7 Rule 11(a) of C.P.C.
The Appellants reliance on the decision of the Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & anr) [2005 (9) TMI 304 - SUPREME COURT] is in support of their submission that merely because the Appellants were Directors of Defendant No. 4 Company, there cannot be any monetary liability on the Directors and the liability would be of the company. The Supreme court observed that there is no universal rule that a Director of a company would be in-charge of its day-to-day affairs. However, the Supreme Court at the same time observed that as to what was the role of the Director of a Company is a question of fact depending on the peculiar facts in each case. This decision arose out of the proceedings initiated under sections 141, 138 of the Negotiable Instruments Act, 1881 and in that context, the Supreme Court had made these observations that to fasten a criminal liability a specific case should be spelt out in the complaint against the person who has sought to be made liable. Parameters of the pleadings in a criminal complaint case cannot be made applicable to the facts of the present case where the issue is under Order 7 Rule 11(a) and Order 1 Rule 10(2) of the Code of Civil Procedure.
The plaint in the present case contains a statement of all the material circumstances constituting fraud. It is trite law that an application under Order 7 Rule 11 read with Order 1 Rule 10 (2) can be moved at any stage of the suit - the appeal lacks merit and is rejected.
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2016 (5) TMI 1605
Principles of natural justice - Denial of duty free benefits for the subject import consignment under Customs Notification No.98/2009-Cus, dt.11.09.2009, without detailed reasons - SCN also not issued - HELD THAT:- Under the circumstances, the Tribunal cannot take up or decide the issue on merit. It would be in the fitness of things that the matter goes back to the Adjudicating authority who should put the appellants on notice and decide the issue by a speaking order after giving them a reasonable opportunity to be heard.
At this juncture, the learned Counsel for the Appellant submits that this is a live consignment and therefore, a time limit may be specified - there are force in the contention of the learned Counsel and request the Adjudicating authority to dispose of the matter in accordance with the above, within a period of two months from the date of receipt of this order.
Appeal allowed by way of remand.
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2016 (5) TMI 1604
Loss on account of embezzlement by the employee - HELD THAT:- We find the assessee has lodged a complaint before the police authorities to the extent of Rs. 25 lakhs only. After the settlement was arrived on 08-09-2009 Shri E. Srinivas, Ex-employee of the assessee paid Rs. 25 lakhs to the assessee company. Since the assessee could not substantiate the claim of embezzlement of Rs. 40,28,270/- and has filed police complaint only to the extent of Rs. 25 lakhs, therefore, we do not find any infirmity in the order of the CIT(A) disallowing the claim of Rs. 15,28,270/- which remained unsubstantiated.
Assessee before us also could not point out any mistake in the order of the CIT(A) nor could he give the proof of embezzlement of Rs. 15,28,270/-. We therefore do not find any infirmity in the order of the CIT(A) and uphold the same. The first issue raised by the assessee in the grounds is accordingly dismissed.
Short Income in comparison to the figures in Form 26AS - difference between the ITS data and details in Form 26AS - HELD THAT:- As in the instant case although the deductor has stated to have paid more amount to the assessee and since the assessee was unable to show that such income has been offered to tax either in this year or in the preceding or succeeding year, therefore, the office memorandum of the CBDT is not applicable to the facts of the present case. In view of the above discussion, we uphold the order of the CIT(A) and the ground raised by the assessee on this issue is dismissed.
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2016 (5) TMI 1603
Validity of reopening - Addition u/s 14A r.w. Rule 8D - HELD THAT:- We agree with assessee’s argument that this tribunal in its own appeal against regular assessment involving section 14A disallowance has already decided that the same does not apply in a cooperative society case enjoying section 80P deduction.
We find that the AO has reopened the said assessment thereby apply gross interest computation formula instead of netting for computing rule 8D disallowance. The law is very well settled by law that Rule 8D is not applicable in the impugned assessment year. A co-ordinate bench of the tribunal in DCIT vs. Trade Apartments [2012 (3) TMI 421 - ITAT KOLKATA] has already rejected Revenue’s contentions against netting formula - Decided in favour of assessee.
Contribution made to ARDA(Anand Research Development Association) for dairy development - claimed as revenue expenditure - HELD THAT:- The assessee is fair enough in pointing out that the above stated tribunal’s decision has rejected its identical plea in earlier assessment years. We appreciate this fair stand to uphold the CIT(A)’s findings under challenge. This second substantive ground fails.
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2016 (5) TMI 1602
Addition of capital gains against the security deposit received by one member of AOP - amount received by the assessee pursuant to the said Joint Venture agreement - HELD THAT:- The share of the assessee in the said gross sale proceeds was to the extent of 3.5%. Under clause 16 of the Joint Venture agreement, it was agreed between the parties hereto that the capital required for the construction of the project other than that of land should be brought in by the party of Third Part. As per clause 17, the party of the Third Part had agreed to give interest free advance of Rs.1 crore to the parties of the First and Second Part each and the said amount had to be adjusted against final payment of revenue share.
Besides the other terms agreed upon between the parties, as per clause 33, it was reiterated that the agreement of Joint Venture related to efficient pooling of the resources and neither parties was transferring to other any kind of right, interest in the said properties and as such the document was exempted from registration under the provisions of Indian Registration Act.
The issue arising before us is with regard to the amount received by the assessee pursuant to the said Joint Venture agreement. The claim of the assessee was that it had received the said security deposit from the developer of the plot in order to safeguard themselves against any charges levied for violation of any provisions. The case of the Department on the other hand, is that as per the AO, the amount has been received on account of transfer of property and as per the CIT(A), the said amount is assessable in the hands of assessee u/s 45(3) of the Act by way of transfer of the said asset to the AOP.
The perusal of Joint Venture Agreement entered into between the assessee and others reflected that the First Part had contributed certain lands and also TDR rights and the assessee had contributed the land to the AOP for development only.
It was not the case of transfer of land to the AOP, but was the case of joint pooling of resources by three different parties, wherein the party of the First Part was to contribute TDR rights, the party of Second Part i.e. assessee was to make available the land, on which the development had to be undertaken and the party of Third Part had to overseas the construction and also contribute funds for the construction of the said project.
In such scenario, where the asset held by the assessee has not been transferred to the AOP, there is no question of charging any income from capital gains in the hands of assessee in this regard under section 45(3) of the Act. The security deposit received by the assessee is not chargeable to tax.
The said security deposit has been refunded by the assessee by cheque to M/s. Shriram Constructions i.e. party of the Third Part in financial year 2014-15. The assessee has also placed the copy of bank account on record, wherein there is debit of Rs.8,50,000/- and Rs.16,50,000/- totaling Rs.25 lakhs.
While completing the assessment in the hands of Parmanand A. Kriplani, who had received 16.67% as against 8.33% received by the assessee, was completed by the AO vide order passed u/s 143(3) - As where the transaction as such has been accepted in the hands of one of co-owners, no adverse view could be taken in the hands of other persons.
While registering Joint Venture Agreement, the market price of the property was fixed and was taken at Rs.2 crores - We find no merit in the said claim of Revenue. The assessee along with others had pooled in their resources i.e. by way of availability of land and TDR rights and finance, respectively and where the property as such has not been transferred to the AOP, there is no question of assessing the value of security deposit as gain arising on the transfer of land in the hands of assessee. Accordingly, we delete the addition made by the AO on account of income from capital gains. The ground of appeal No.1 raised by the assessee is thus, allowed.
Disallowance of transport charges paid by the assessee - The said disallowance was made since the expenses were claimed on self made vouchers and was also paid in cash. AO also noted certain discrepancies in the bills produced by the assessee. In the totality of the above said facts and circumstances, we restrict the disallowance to Rs.25,000/-. The ground of appeal raised by the assessee is thus, partly allowed.
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2016 (5) TMI 1601
Rejection of claim of the petitioner for counting services rendered by him with the Auto Tractors Limited, for the purposes of calculating the qualifying service prescribed for pensionary purposes under the relevant rules.
HELD THAT:- The government order dated 10.7.1998 relates to Central Government employees or employees of autonomous bodies of the Central Government seeking absorption in autonomous bodies under the State Government and the State Government employees seeking absorption in the Central Government or in the autonomous bodies of the Central Government, for the purposes of counting their services rendered under their erstwhile employer for the pensionary benefits.
Admittedly the petitioner does not fall in the aforesaid category, as, there is nothing on record to indicate that the A.T.L. was an autonomous body of the Central Government. The petitioner admittedly was not a State Government employee prior to his absorption. Furthermore, the benefit mentioned in the said government order was available only if both the establishments were pensionable. Therefore, even assuming the applicability of the said government orders there is nothing on record to show that the services of the petitioner in the A.T.L. were pensionable. Moreover, the government order was subsequently clarified vide government order dated 28.12.2001 which has been impugned herein.
It has been mentioned in the government order dated 28.12.2001 that the earlier government order dated 10.7.1998 was applicable only where pension scheme was applicable in the autonomous bodies referred therein, however, as, at some places in the said government order the word 'Corporation/Undertaking' has been used in place of autonomous bodies and considering the categorical policy of the Government of India that services rendered in a Corporation/Undertaking are not countable for the purposes of pensionary benefits, therefore, the government order dated 28.12.2001 on the same lines clarified its earlier order dated 10.7.1998 that the same shall be applicable only to autonomous bodies and not Corporations/Undertakings - Though the aforesaid government order, considering the subject matter referred hereinabove, do not apply to the case of the petitioner, but assuming their applicability there is nothing on record to show that the expenditures of the A.T.L. were entirely or more than 50% of its financial requirements were financed by the State Government.
There is another reason for non-applicability of the said government orders to the case of the petitioner that is absorption herein was made under the Rules of 1991 framed under the proviso to Article 309 wherein there was no such provision for giving the benefit of services rendered in the A.T.L. to the petitioner as has been held by the division Bench in Ram Shanker Gupta's case [2015 (11) TMI 1888 - ALLAHABAD HIGH COURT].
The claim of the petitioner is without any factual or legal basis. The writ petition is accordingly dismissed.
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2016 (5) TMI 1600
Dismissal of appeal for non-prosecution - HELD THAT:- As on the date fixed on 12/05/2016, none appeared on behalf of the assessee. It therefore appears that assessee is no more interested in prosecuting the appeal therefore appeal of the assessee is liable to be dismissed. The law aids those who are vigilant, not those who sleep upon their rights. This principle is embodied in well known dictum, “VIGILANTIBUS ET NON DORMIENTIBUS JURA SUB VENIUNT’.
Considering the facts and keeping in view the provisions of rule 19(2) of the Income-tax Appellate Tribunal Rules as were considered in the case of CIT vs. Multiplan India Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] we treat this appeal as unadmitted.
Their Lordships of Hon’ble Supreme Court in the case of CIT vs. B. Bhattachargee & Another [1979 (5) TMI 4 - SUPREME COURT] held that the appeal does not mean, mere filing of the memo of appeal but effectively pursuing the same.
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2016 (5) TMI 1599
Addition u/s 68 - unexplained share application money and undisclosed cash deposit - HELD THAT:- Assessee has received share application money through account payee cheques and through normal banking channels. It is not the case of the revenue that the share application was not made from the bank account of the applicant companies and the share applicants were also produced before the AO.
As it is not the case of the revenue that the shares were allotted to the subscribers are matter of records of ROC and confirmed by annual return and return of allotment as filed with ROC but the AO has not made any verification with respect to bank vis-a-vis respective companies nor has been called for any records of the respective companies. AO has accepted the genuineness of these companies and receipt of share application money as well as share premium. This is a genuine share application money and CIT(A) has rightly deleted the addition basing his decision on remand report of the AO.
Undisclosed cash deposit - We find that the assessee has co-related the withdrawals made with that of cash deposit and also cash sales made during the period 02.04.2005 to 28.05.2005. Assessee has filed complete summary of cash withdrawals and cash deposit and cash sales which is co-related to the cash deposit with the bank account and/or treated as undisclosed. CIT(A) has deleted the addition based on the remand report of the AO, who admitted that these cash deposits are explained by the assessee in remand proceedings. Decided against revenue.
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2016 (5) TMI 1598
Additional income offered in survey conducted - whether this cash is relatable to the business of the assessee, in accordance with ‘Kim Pharma P. Limited’ (2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] and if so, whether it is not a business income? - HELD THAT:- As rightly contended AO has accepted this income of the assessee as business income. The profit & loss account of the assessee for the period from 04.02.2011 to 31.03.2011. shown Palace income the details of which are, given. Therefore, the grievance of the assessee in this regard is correct and the same is accepted.
In keeping with ‘Kim Pharma P. Limited’ (supra), as relied on in ‘Gaurish Steels P. Limited’ (2015 (11) TMI 631 - ITAT CHANDIGARH] this income has been considered as the assessee’s business income and not as deemed income u/s 69A of the Act. As such, the business losses incurred by the assessee during the year can be set off against the income surrendered. As per the requirement of section 71 of the Act, the AO is directed to act accordingly. Thus, Ground Nos. 1 to 3 are accepted.
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2016 (5) TMI 1597
Direction to the respondents to apply Irrigation Potential Restoration Charges - water allocated to the petitioner, based on deficit in water for irrigation as per the latest report - HELD THAT:- The water allocation is finalized on 12.12.2007 after High Power Committee accepted it in its meeting dated 13.05.2007. On 16.08.2008 sanction is granted for permanent water allocation of 87.60 MCM from completed Upper Wardha Project and it is to be operational only after agreement is made. As per clause 13, though action was to be taken within three years, period was extended up to 31.05.2012. The Petitioners have paid the amount in installments and not when it was determined or water was reserved for it. The petitioner has, in communication dated 10.05.2012, agreed to pay Rs. 232.18 Crores in five installments over a period of two years with interest. Hence, for this delayed payment of IRC, interest of justice demands that it must pay the interest @ 10% per annum.
It is declared that the demand of IRC at revised rate i.e. as per decision dated 06.03.2009 from the petitioners is illegal and unsustainable. Said decision dated 06.03.2009 fixes maximum rate of IRC at Rs. One lakh per Hectare prospectively from 01.04.2009 and is not applicable in case of petitioner to whom water allocation is finalized on 12.12.2007. Hence the Respondents shall accordingly receive the IRC at the rate of Rs. 50.000/- per Hectare with interest.
Petition allowed in part.
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2016 (5) TMI 1596
Issue of IPO - Role of Book Running Lead Manager - Appellant had not employed reasonable skill and care while conducting its due diligence exercise in respect of the IPO of Issuer Company in its capacity as Book Running Lead Manager ("BRLM") - non-disclosure as a related party transaction - Appellant had failed to exercise due diligence with respect to the Issuer Company's IPO which had resulted in certain incorrect and inadequate disclosures in the RHP - Appellant was thus prohibited from taking up any new assignment in the securities market in any manner for a period of six months from the date of the order for allegedly violating provisions of Regulation 64(1) of the SEBI (Issue of Capital and Disclosure) Regulations, 2009 - HELD THAT:- As in accordance with the provisions of the ICDR, the disclosure on Related Party Transactions is to be submitted as a part of the overall financial information to be certified by the auditors. Once the information is so certified, and this certified financial information is reproduced in the offer document, the ICDR's requirements of Due Diligence are considered to be met. As noted above, disclosures on related party transactions need to be made as per para (B)(12) of section IX of the ICDR Regulations which, in turn, states that they must be made in accordance with AS 18. It, therefore, falls to us to consider and decide whether Gadeo or Richa Mittal qualify as related parties in accordance with AS 18.
It is evident from a plain reading of the definition of 'relative' as provided under para 10.9 of AS 18 that the relatives covered under the definition are, quite categorically put, the spouse, son, daughter, brother, sister, father and mother who may be expected to influence the key management personnel of the reporting enterprise, in this case, the Issuer Company. This definition is exhaustive in nature. It does not leave scope for the inclusion of relatives by extending the list of relatives to other people. The intention of the law maker in this regard is crystal clear viz., only those relatives particularly mentioned in para 10.9 will be relevant for determining related party transactions. Mrs. Richa Mittal being the sister-in-law of Mr. Sanjeev Mittal is not covered under AS 18. In keeping with AS 18, as per the records, even the peer review auditors have not treated the transaction with Gadeo as a related party transaction. As all documents were duly analysed by the Appellants and there was no information in any of these indicating that the transaction with Gadeo was a related party transaction.
It appears that the factum of Mrs. Richa being the sister-in-law of Mr. Sanjeev Mittal was not properly conveyed to the appellant. This is evidenced from the fact that on receiving SEBI's query regarding Richa Mittal's stature with respect to the Issuer Company, the Appellant pointedly asked the Issuer Company whether Mrs. Richa Mittal was connected with the Issuer Company in any manner, and the Issuer Company replied in the negative vide letter dated February 7, 2011 -despite the presence of certain pointers in the information that the Appellants possessed with themselves, it is a matter of fact that nothing was contained in the partnership deed that explicitly pointed towards a relationship between Mr. Sanjeev Mittal and Mrs. Richa Mittal or indicated that she was married to Mr. Sanjeev Mittal's brother. This combined with the fact that AS 18 does not mention a sister-in-law as a relative and that Mrs. Richa Mittal did after all own 97.5% of Gadeo, dwarfing the 2.5% owned by Mr. R.K. Mittal, must be construed as a mitigating factor.
Non-disclosure of the taking of ICDs by the Issuer Company - As after analyzing the concept of due diligence in detail in Appeal No. 275 of 2014, we have already held that an MB should also examine bank statement of the issuer company though mandatorily not required. Relying upon the same reasoning we note that had the Appellant looked at the bank statements of the relevant period, the ICDs would have come to light and the Appellant would have been able to reflect the same in the RHP and the Prospectus.
Albeit, it is not necessary for a BRLM to look into the bank statements it would have been prudent for the Appellant to peruse the bank statements instead of merely relying on the Statutory Auditor's Report and the statement of the Issuer Company. Although, there is some merit in the charges leveled against the Appellants, as far as non-perusal of Bank statements of the Issuer Company and disclosure of related party transactions is concerned, in view of the fact that the punishment already undergone is far in excess of the punishment which the Appellants deserved against the charges in question, we quash the remnant punishment imposed vide the Impugned Order and partly allow the Appeal.
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2016 (5) TMI 1595
TP Adjustment - DRP directed the AO to restrict the adjustment to the cost relating to import of raw material from AE, which was 33% of material cost and 16% of total operating cost - As argued this direction was not implemented by AO - HELD THAT:- As, seen from the draft order, the TP adjustment proposed was Rs. 8,98,90,000/-whereas the final adjustment made was Rs. 8,80,08,000/- It seems AO has implemented only other direction of adopting average OP/sales Of comparable companies at 8.23% as against 8.51% proposed as directed - The direction of DRP in para 3.1.3 has not been implemented. To that extent, AO's order is not in compliance with the directions of DRP. AO is directed to modify the adjustment as per the direction of the DRP on the issue. Ground No. 2 of assessee is accordingly allowed
Adjustment for capacity utilisation - Assessee capacity utilization was at 78% of total capacity there by cost of overheads is more, has not been considered - HELD THAT:- In principle we are in agreement with the contentions raised by assessee, as GP over sales can eliminate the difference in claim of depreciation due to age of machinery rate at which it was claimed and method of claims like straight line or written down value. We accordingly direct the AO/TBO to adopt the comparison of profitability ratios adopting GP over sales.
Since the details of capacity utilization of the comparable companies and rate of depreciation could not be analysed as commented by DRP, it would be better if GP analysis was undertaken taking sales less cost of raw material as basis (excluding other cost including Depreciation, interest etc) so that auto components profitability could be analysed so as to consider whether the import" of raw material from AE has effected the profitability of assessee under the TP provisions. Accordingly, we set aside the impugned orders of the Revenue authorities on this issue and restore the matter to the file of AO/TOP to carry out the exercise as stated above. Assessee should be given due opportunity. However, we make it clear that if any adjustment is required' to be made the same is to be restricted, as directed by DRP above. The matters which have attained finality are not be reopened. AO/TPO is directed accordingly. Ground No. 3 is allowed for statistical purposes.
MAT credit objected to by assessee was not adjudicated by the DRP even though AO in the draft assessment order has determined the tax liability without giving appropriate MAT credit and so assessee is aggrieved - HELD THAT:- AO is directed to give MAT credit as per the provision and facts on record. Assessee is directed To furnish necessary details to the AO. Ground is allowed.
Interest u/s. 234B and 234C are consequential In nature and does not require separate adjudication. However, AO is directed to furnish the working of calculation of 'interest in the order so that assessee can object if there are any omissions/commissions in the levy.
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2016 (5) TMI 1594
Seeking transfer of investigation from the state police/special team of State Police Officers to C.B.I. - Physical and mental cruelty charge against naval officer and his family - charge of sexual abuse - allegations of wife-swapping - HELD THAT:- It is well settled that the extraordinary power of the constitutional courts in directing C.B.I. to conduct investigation in a case must be exercised rarely in exceptional circumstances, especially, when there is lack of confidence in the investigating agency or in the national interest and for doing complete justice in the matter.
Considering the facts and circumstances of the case in hand, we are of the view that the case in hand does not entail a direction for transferring the investigation from the state police/special team of State Police Officers to C.B.I. The facts and circumstances in which the offence is alleged to have been committed can be better investigated into by the state police. However, having regard to the nature of allegations levelled by the petitioner, we deem it appropriate to direct the State of Kerala to constitute a special team of police officers headed by an officer not below the rank of Deputy Inspector General of Police to investigate the matter.
Petition is disposed of with direction to the Director General of Police, Kerala to constitute a special investigation team headed by a police officer not below the rank of Deputy Inspector General of Police to take up further investigation in FIR No.260 of 2013. The special investigation team shall take up further investigation in accordance with law and complete the investigation at an early date preferably within a period of three months from today - transfer petition dismissed.
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2016 (5) TMI 1593
Seeking grant of bail - Framing of charges against the accused Appellant Under Sections 10, 13, 17, 18, 18A, 18B, 20, 21, 38, 39 and 40(2) of the Unlawful Activities (Prevention) Act, 1967, amended 2008 and Sections 387, 419, 465, 467, 468, 471 read with Section 120-B of the Indian Penal Code, 1860 - HELD THAT:- The accused Appellant has been in custody since April, 2011 i.e. for over five years. The trial is yet to commence inasmuch as the learned State Counsel has submitted that the 9th of May, 2016 is the first date fixed for the trial. There are over 200 witnesses proposed to be examined. The accused Appellant is a lady. She has also been acquitted of similar charges leveled against her in other cases. Taking into account all the aforesaid facts we are of the view that the accused Appellant should be admitted to bail. We accordingly direct that the accused Appellant Angela Harish Sontakke be released on bail by the learned trial Court in connection with Sessions Case No. 655 of 2011 arising out of CR No. 19/11, PS, ATS Kalachowki, Mumbai.
Appeal allowed.
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2016 (5) TMI 1592
Disallowance of provisions made on account of leave encashment under section 43B - HELD THAT:- Undisputedly, the deduction claimed by the assessee is only a provisions and no payment was actually made by the assessee during the relevant previous year. Therefore, in terms of section 43B(f), it is not allowable. However, in the case of Exide Industries Ltd. [2007 (6) TMI 175 - CALCUTTA HIGH COURT], the Hon’ble Calcutta High Court had struck down the provisions of section 43B(f) as unconstitutional. However, the Department being aggrieved of the said judgment had preferred appeal before the Hon'ble Supreme Court and the Hon'ble Supreme Court while admitting the appeal of the Department in Special Leave to Appeal (Civil) [2009 (5) TMI 894 - SC ORDER] had directed the assessee to pay tax as if section 43B(f) is in the statute book, however, the assessee permitted to claim the deduction in the return of income.
We restore the matter back to the file of the Assessing Officer with a direction that assessee will pay the tax as if section 43B(f) is on the statute book. However, till the decision of the Hon'ble Supreme Court is rendered in case of CIT v/s Exide Industries Ltd. (supra), the Department will not recover the penalty and interest which may accrue till the decision of the appeal in the case of Exide Industries Ltd. (supra). It would be open to the Department to recover the outstanding interest payment once the appeal in the case of Exide Industries Ltd. (supra) is decided in favour of the Department. Ground no.1, is allowed for statistical purposes.
Disallowance of revenue sharing - HELD THAT:- As found from the record that this is recurring dispute between the assessee and the Department right from the assessment year 2000–01. However, in a series of decisions in assessee’s own case, the Tribunal has decided the issue in favour of the assessee holding that the amount paid to DOT towards revenue sharing license fee as revenue expenditure.
There being no material difference in facts and no contrary decision has been brought to our notice by the learned Departmental Representative, respectfully following the consistent view of the Tribunal in assessee’s own case we allow assessee’s claim of deduction on account of revenue sharing license fee
Depreciation claim on revenue sharing license fee - Since we have allowed assessee’s claim of deduction in respect of revenue sharing license fee by holding it as revenue expenditure, this ground raised by the Department has become infructuous.
Disallowance of interest expenditure towards interest free loan given to the subsidiary - HELD THAT:- As relying on assessee own case [2015 (4) TMI 92 - ITAT MUMBAI] there was direct commercial expediency in advancing funds to subsidiaries have not been controverted by the Revenue by bringing any positive material on record. We therefore do not find any reason to interfere with the order of ld. CIT(A) deleting the disallowance of interest attributable to funds advanced to subsidiaries. - Decided against revenue.
Deduction towards club fee - Allowable revenue expenses or not? - HELD THAT:- On a perusal of the order of the Tribunal for the assessment year 2004–05 and 2005–06held that expenditure was incurred was revenue in nature as held by the Hon’ble High Court, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of Club fees paid by the assessee company.
Proportionate deduction claimed u/s 35DD on legal fee - HELD THAT:- As is evident, in the impugned assessment year the assessee had not claimed the expenditure in the return of income. He put forward his claim for deduction under section 35DD only at the stage of first appellate proceedings, that too, by raising an additional ground and the learned Commissioner (Appeals) dismissed the ground of the assessee for the reason that the issue was not examined by the Assessing Officer. Therefore, on over all consideration of facts and material on record, we are inclined to restore this issue to the file of the Assessing Officer for deciding afresh after providing due opportunity of being heard to the assessee. Ground no.2, is allowed for statistical purposes.
Depreciation on revenue sharing license fee carried over by BTA Cellular Ltd. in continuation of amalgamation with the assessee - HELD THAT:- Commissioner (Appeals) having found that neither BTA nor the assessee have claimed deduction under section 35ABB directed the Assessing Officer to verify the fact and allow assessee’s claim of depreciation. We do not find any infirmity in the aforesaid direction of the learned Commissioner (Appeals). As already held by us, revenue sharing license fee paid to DOT is otherwise allowable as revenue expenditure.
Since the BTA was claiming depreciation on revenue sharing license fee after treating it as intangible asset after capitalization the assessee continued with the same accounting principle after merger of BTA insofar as revenue sharing business fee paid by BTA which was acquired as a part of block of asset. In the aforesaid facts and circumstances, assessee’s claim of deduction being legally valid has to be allowed. Therefore, we uphold the order of the learned Commissioner (Appeals) on the issue by dismissing ground no.2, raised by the Department.
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2016 (5) TMI 1591
Assessment proceedings u/s 143(3) r.w.s.143(2) - addition u/s 68 - Admission of additional evidences - HELD THAT:-Voluminous documents as additional evidences have been placed by the assessee in the paper book filed before the Tribunal and a prayer has been made by the assessee that proper and adequate opportunity was not given by the authorities below before completing the assessment and during the first appellate proceedings as set out above and it was submitted before the Tribunal that these additional evidences be admitted under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, in the interest of substantial justice as the assessee was not accorded adequate, sufficient and proper opportunity by the Assessing Officer to file these additional evidences and the Commissioner of Income- tax (Appeals) did not admit these additional evidences during the first appellate proceedings as set out above, the appeal be decided by the Tribunal on the merits after admitting and considering these additional evidences on the merits.
Thus in the interest of substantial justice, these additional evidences needs to be admitted to advance substantial justice in accordance with rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, for the reasons and discussions as detailed above and the matter is set aside and restored to the file of the Assessing Officer for de novo determination of the matter on the merits after examination and verification of these aforestated additional evidences filed before the Tribunal - Appeal filled by assessee allowed for statistical purposes.
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2016 (5) TMI 1590
Belated payment of employees’ contribution to PF and ESI in contravention of the provisions of section 36(1)(va) - HELD THAT:- There is no dispute to the fact that the assessee in the instant case has deposited the employees’ contribution to PF and ESI before the due date of filing of the return of income although the same were deposited after the due date prescribed under the relevant Act.
The Coordinate Benches of the Tribunal following the decisions of the Hon’ble Bombay High Court in the case of Ghatge Patil Transports Ltd.[2014 (10) TMI 402 - BOMBAY HIGH COURT] and in the case of CIT Vs. Hindustan Organics Chemical Ltd. [2014 (7) TMI 477 - BOMBAY HIGH COURT]are consistently taking the view that employees’ contribution to PF and ESI, if paid on or before the due date of filing of the return of income, is an allowable deduction. Since the assessee in the instant case has admittedly deposited the employees’ contribution to PF and ESI before the due date of filing of the return, a fact submitted before the AO as well as CIT(A) and not controverted by the revenue, therefore, we are of the considered opinion that no disallowance on account of such delayed payment is called for. We accordingly set aside the order of the CIT(A) and direct the AO to delete the addition. Grounds raised by the assessee allowed.
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2016 (5) TMI 1589
TP Adjsutment - Addition in respect of advertisement expenditure incurred by the assessee at overseas - HELD THAT:- There is no agreement or documents produced by the assessee to show the assessee is liable to incur this expenditure - assessee is getting only mark-up on the cost of manufacture of the goods supplied to the AE and it is nowhere connected with the sales of the AEs. All the risks associated with the sales of AEs, is to be borne by AE only. In such circumstances, assessee is not required to incur any expenditure towards sales. More so, when there is no stipulation by way of any agreement between the assessee and the AE, it is to be borne in mind that if the assessee had sold similar goods to other non-AE, assessee would not have incurred such expenditure.
The benefit derived from the impugned expenditure is not at all for the assessee and it goes directly to the AE only. In our opinion, services in connection with such advertisement cost which was incurred in abroad, benefit accrued to AE and the assessee cannot claim any of such expenditure as the AE is in different tax jurisdiction constituted distinct and independent entity subject to the law of the respective countries and the parent company cannot claim the benefits of their AE’s business or may claim a beneficial ownership treating the AE as virtually non entities. This view is supported by the recent judgement of Supreme Court in the Vodafone International Holdings B. V. [2012 (1) TMI 52 - SUPREME COURT]
As held by Mumbai Bench in the case of Stream International Services Pvt. Ltd [2013 (9) TMI 339 - ITAT MUMBAI] that investment of expenditure to AE is very much a transaction as per section 92F(v) and consequently it is a international transaction as per sec.92B requiring consideration u/s.92 - argument of the assessee is that TIML is under losses and hence no TP adjustment is necessary on transaction which is not tenable in view of the decision of the Bangalore Tribunal in the case of 24/7 Customer.com Pvt. Ltd.[2013 (1) TMI 45 - ITAT BANGALORE]. Accordingly, this ground of the assessee is rejected.
TP addition on account of interest in respect of interest free advertisement advances made by the assessee - HELD THAT:- In this case, the assessee made interest free advances to the associate company, which includes the amounts spent for brand building, advertisement and related expenditures. As we discussed in the earlier para with reference to ALP of Advertisement expenses, the transaction between the assessee and the AE falls within the ambit of international transaction as per the provisions of the section 92B of the Act, then ALP with reference to the interest on such advances is to be computed. Accordingly, the TPO after considering the fact that assessee had adopted following rate of interest on its foreign currency loans to its AE in accordance with the bank rates prescribed by Reserve Bank of India.
Thus, the TPO/AO applied the same rate to determine the ALP of the advances made by it to its AE, TIML had worked out ₹ 1,20,41,897/-. Since the assessee has invested its funds in AE, thereby assessee had taken a risk of employee its working capital with the AE and if the assessee had no relation with that entity, it would not have incurred such expenditure on behalf of the assessee or advanced money to such an entity. Thus, non-charging of interest to such outstanding attracts Transfer Pricing provisions and it is appropriate to charge interest at least LIBOR plus 2% rate as held by Mumbai Bench of the Tribunal in the case of M/s.Aurinpro Solutions Ltd. [2013 (11) TMI 806 - ITAT MUMBAI] - Accordingly, we upheld the argument of the ld.D.R on this issue. If any difference in the rate of interest is charged by the TPO/AO as compared to LIBOR plus 2%, the same to be recomputed.
Computation of deduction u/s.80HHC of the Act with reference to DEPB receipts - exclusion of 90% of export incentives from the business profits under Explanation (baa) to sec.80HHC - AO was of the opinion that these export incentives received by the assessee did not fall in clauses (iiia), (iiib) and (iiic) of sec.28 - HELD THAT:- In our opinion, the issue is squarely covered by the decisions of the Supreme Court in the case of Topman Exports [2012 (2) TMI 100 - SUPREME COURT] wherein held that when the DEPB is sold by a person, his profit on transfer of the DEPB would be the sale value of the DEPB less the face value of DEPB which represents the cost of the DEPB and not the entire sum received by him on such transfer; DEPB is chargeable as income under clause-(iiib) of section 28 in the year in which such person applies for DEPB credit against the exports whereas the profits on transfer of the DEPB by that person is chargeable as income under clause –(iiid) of Sec.28 of the Act in his hands in the year in which he makes the transfer. Accordingly, we direct the AO to re-compute the deduction u/s.80HHC of the Act by applying Explanation(baa) of Sec.80HHC of the Act.
Allocation of head office expenses and consultancy expenditure while computing eligible profit from jewellery division on the basis of turnover for the purpose of Sec.80-IB - HELD THAT:- In our opinion, when expenses incurred at Head office cannot be identified with any single unit, apportioning the same on the basis of turnover is an appropriate method as held by the jurisdictional High Court in the case of M/S. TTK PHARMA LTD. [2011 (8) TMI 307 - MADRAS HIGH COURT]. Accordingly, this ground of assessee is dismissed. The same principle is applicable in respect of allocation of professional fees paid to MCKENSEY. Accordingly, this ground of assessee is also dismissed.
Non-granting of export incentives u/s.80-IB - HELD THAT:- This issue is squarely covered by the judgement of Supreme Court in the case of Liberty India Vs. CIT[2009 (8) TMI 63 - SUPREME COURT] wherein held that incentives which flow from the schemes formulated by Central Government or from Sec.75 of the Customs Act, 1962, hence, incentives profits are not profits derived from eligible business and therefore, such incentives do not form part of net profits of the industrial undertaking for the purpose of deduction u/s.80-IA/IB of the Income Tax Act,1961. Applying the above ratio, we reject the claim of assessee. Accordingly, this ground raised by assessee is dismissed.
Exclusion of deduction claimed and allowed u/s.43B while computing deduction u/s.80-IB - claim of deduction u/s.43B in the jewellery division vis-à-vis deduction u/s.80-IB - HELD THAT:- In this case, the ld. Assessing Officer computed the income of assessee after allowing the annual payment of bonus and commission in terms of Sec.43B of the Act and grated deduction u/s.80-IB of the Act. Since the profit of assessee to be computed for the purpose of Sec.80-IB of the Act after taking into account all the expenses claimed under sections 30 to 43D of the Act and there is no infirmity in the order of the lower authorities, the same is confirmed on this issue. Hence, this ground raised by the assessee is rejected.
Disallowance of claim of deduction u/s.80-IB in respect of profits of Euro Watch division - AO found that the assessee claimed deduction u/s.80-IB at the rate of 30% of profits - HELD THAT:- Claim of deduction u/s.80-IB of the Act in respect of profits of Euro Watch Division cannot be denied on the ground that it is only notional profit, as assessee uses the products of Euro Watch Division for captive consumption of the assessee or for the reason that assessee has not earned actual profits. In our opinion, the profit from Euro Watch Division to be worked out on standalone basis by apportioning of necessary expenditure in proportionate to the turnover to this division and ascertained the true profit of the Euro Watch Division. The market value of product of the Euro Watch Division is to be determined on the average price to be paid, or paid by the assessee to the other parties in the open market, had it been purchased from the outsiders which would be in terms of Sec.80IA(8) r.w.sec.80-IB(13) of the Income Tax Act. Accordingly, the issue in dispute is remitted to the file of the AO for re-computation of the profit of Euro Watch Division and considered the claim of assessee for deduction u/s.80-IB in the light of order of Tribunal in the case of West Coast Paper Mills Ltd.2006 (4) TMI 184 - ITAT BOMBAY-I] - This issue is partly allowed for statistical purposes.
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