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2022 (5) TMI 1654
Maintainability of suit - Reduction of share capital of company - order passed by the Appellate Authority for Industrial and Financial Reconstruction accepting the reduction of the existing paid up share capital of the plaintiff company by 99% on equity capital and 99% on the preference share capital is valid and binding on the defendant.
Maintainability of suit - Whether the order dated December 4, 2007 passed by the Appellate Authority for Industrial and Financial Reconstruction accepting the reduction of the existing paid up share capital of the plaintiff company by 99% on equity capital and 99% on the preference share capital is valid and binding on the defendant? - HELD THAT:- Although, the issue of jurisdiction of this Court and limitation have not been raised separately but same is covered by issue no.3. The defendant being a resident of Loudon Street within the Ordinary Original Civil jurisdiction, the suit against the said defendant can be filed and maintained in this Court. The original share holder i.e., the husband of the defendant died on 22nd June, 2012. The defendant’s first assertion of right claiming 500 shares was on 6th November, 2016. Pursuant thereto certain letters were exchanged between the parties. Ultimately, the plaintiff by a letter dated 10th February, 2017 issued 50 shares of Re.1/- each to the defendant which she refused to accept and demanded 500 shares. The defendant thereafter by a letter dated 11th March, 2017 once again requested the plaintiff-company to issue 500 shares which was followed by a complaint to Security & Exchange Board of India (SEBI). The suit was instituted on or about 22nd September, 2017 is within limitation. In respect of the relief(s) claimed the defendant is the sole party necessary. The suit is, therefor, maintainable.
Whether the paid up equity share capital of the plaintiff stood reduced by 99% in terms of the Order dated December 4, 2007 passed by the Learned Appellate Authority for Industrial and Financial Reconstruction? - To what other reliefs the plaintiff is entitled to? - HELD THAT:- The suit has been admittedly filed after the introduction of IBC and repeal of SICA, 1985 by the 2003 Act. Section 231 of IBC bars the jurisdiction of Civil Courts in respect of matter under its domain. After repeal of SICA, the plaintiff has to approach the appropriate authority under IBC for implementation of the scheme as the reference regarding the plaintiff-company remained pending as on the date of institution of the suit. Despite the bar to jurisdiction of Civil Court, the Authority under IBC cannot pass a declaratory decree inter se between the company and an individual share holder as in the case in hand. This is also the reason for holding the suit to be maintainable.
In the instant case the reduction of share capital was brought by way of a Rehabilitation Scheme framed under Section 18(2)(f) and Section 18(4) of the SICA, 1985 and not by following the procedure available under the Companies Act. The BIFR and the AAIFR under the provisions of Section 18(2)(f) and Section 18(4) are competent to formulate a composite scheme permitting reduction of share capital for rehabilitation of the company - It is also possible that the Rehabilitation Scheme permitting reduction of share capital may be further modified during the course of implementation which may have an effect over the portion of the scheme which permits reduction of share capital. It can, therefor, be said that still the scheme has been successfully implemented, the reduction of share capital permitted under the said scheme does not achieve finality and is subject to being further modified.
The Rehabilitation Scheme which permitted reduction of share capital was in operation at the time when the suit was instituted. The scheme remained in operation till 31st March, 2022. After 31st March, 2022 the operation period of the scheme can either be extended by a competent forum or the scheme will be held to have failed. In either case, the right as to reduction of share capital in favour of the plaintiff- company does not crystallize. Thus, taking the fact scenario at the time when the suit was instituted as also the subsequent events that may occur after 31st March, 2022 it is evident that the reduction of share capital permitted under the scheme has not crystallized - Since, the right in favour of the plaintiff has not crystallized and the plaintiff is not entitled to a declaration of a legal character, no decree of declaration can be passed in the facts of the case. The consequential injunction cannot also be granted independently of the decree of declaration.
Since the suit is dismissed, the connected application filed by the defendant after conclusion of hearing also stands dismissed. Urgent photostat certified copy of this judgment and order, if applied for, be supplied to the parties on priority basis after compliance with all necessary formalities.
Suit dismissed.
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2022 (5) TMI 1653
Disregarding and not dealing with the argument advanced on Section 62 of the Indian Contract Act, 1872 - mere presence of Allottees will amount to consent for extension of date of possession despite of the fact that the Respondent nos.1 and 2 themselves in their original complaint before the RERA authority relied upon and did not dispute the concerned Minutes of the meetings and correspondence evidencing extension of the date of possession, or not - learned Member of the RERA tribunal has considered all relevant aspects of the matter concluding that the Appellant herein failed to handover possession as per agreed date and therefore Respondent nos.1 and 2 are entitled to a refund under Section 18 of RERA.
HELD THAT:- The defence of the promoter that the complainants have attended the subsequent meetings and thereby they have accorded their implied consent is of no consequence, since not a single document has been brought on record, which would establish that the complainants have consented to the extension of the time-line to 17/09/2016 and, subsequently, as indicated in the meeting dated 17/09/2016, by 14 to 15 months. The minutes of the said meeting placed on record with regard to the presence of the complainant-Mrs. Radha Arakkal and the decision reflected in minute No.6, resolving that the construction work of “Sai Sapphire” shall start in the first week of December 2016 and endeavour shall be made to complete “Sai Sapphire” between 14 to 15 months, do not in any manner indicate the consent of Mrs. Radha Arakkal, particularly when a right is conferred upon the investor/purchaser to seek a refund on account of the time-line for delivery of possession, being not adhered to.
Pertinent to note that even as on date, as per the learned counsel for respondent Nos.1 and 2, the project is not complete and the fat is not available for delivery of possession to the complainants/respondents. The breach of the condition in the agreement is thus apparent and merely on the ground that an oral arrangement was worked out with consent of one of the complainants to extend the period of completion of project, resulting in depriving the right vested in the complainants under Section 18 of the RERA, cannot be argued.
The document which is reduced into writing can only be altered, varied, added, subtracted, rescinded by executing a subsequent document in the like manner i.e. in writing and merely an oral agreement will not have the effect of changing/ altering the original terms and conditions of the agreement, which is reduced into writing - Where under a law, a contract or disposition is required to be writing and the same has been reduced in writing, it’s terms cannot be modified, altered or substituted by oral contract or disposition and no parol evidence will be admissible to substantiate such a oral contract or disposition.
The agreement entered into between the parties, which has been reduced into writing cannot be substituted or stand novated by a subsequent oral understanding, the substantial questions of law formulated above, are answered in the negative.
By upholding the impugned orders passed by Maha RERA and the Appellate Authority, the appeal is dismissed.
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2022 (5) TMI 1652
Offence u/s 205(1A) and 205A of Companies Act - criminal proceedings under Section 482 of Cr.P.C - accused company declared a dividend of but failed to deposit the amount in a separate bank account within five days and did not disburse it to the shareholders within thirty days - accused No. l is the Company and other accused persons are Managing Director and Directors of the Company and have declared the dividend to their shareholders and they have not paid to the shareholders.
Offence was committed under the Old Company's Act, 1956 - as contended that the penal provision brought on the statute only to see the dividend shall be payable to the shareholders and once the dividend were already paid, the question of punishing the Company does not arise - HELD THAT:- Admittedly, the dividend was declared by the company on 29-9-2012 and they have not transferred the dividend declared within five days of its declaration to separate account as per Section 205(1A) and they have also not disbursed the dividend within thirty days from the date on which the due payable as per Section 205(1A), if calculated and if the dividend declared on 29-9-2012 within 5 days i.e., on 4-10-2012, they have to deposit in separate account and within 30 days i.e., on 3-11-2012 and they have to disburse the amount to the shareholders. Admittedly, the petitioner-company is defaulter in depositing and disbursing the amount, thereby, committed offence under section 205(1A) and 205A of Companies Act which is punishable under section 207 of the Companies Act.
It is also not in dispute that the SEBI issued notice on 13-2-2013 and on 23-2-2013. The Head HR and Admin. of the Company sent a letter to the SEBI stating that he may require some more time to consult with the Directors as they have traveled to abroad. Subsequently, on 13-3-2013, again Head HR and Admin, of the Company wrote a letter to SEBI stating that they could not make the arrangement for payment of declared dividend and funds and cash flows have been affected badly due to defaulters and delays from their side and also they sought for opportunity to rectify and make the payment of dividends along with simple interest of 12% per annum as per Section 205A(4) of the Companies Act. Subsequently, on 28-6-2013, one Shiva Kumar Reddy, the Managing Director-accused No. 2 send a letter for having paid the dividends with 18% interest p.a. for delayed payments. These documents clearly indicates that the accused-company has committed offence under section 207 of the Companies Act apart from not depositing the amount within five days as per Section 205(1A) of Companies Act.
Calculation of limitation offence under sections 205(1A) and 205A - Contention raised by the learned counsel for petitioners that the limitation point that the last amount was paid on 28-6-2013 as per their own letter, they have admitted that they have paid the entire amount along with interest. Therefore for the purpose of calculation of limitation offence under sections 205(1A) and 205A are the continuing offences until payment was made as on 28-6-2013. Such being the case, the complaint came to be filed in the year March 2016 within three years of the offence committed which is also continuing offence and it is continuing offence, the recurring limitation extends until the payment was made. Therefore, absolutely, there is no delay in filing the complaint and it was barred by the limitation under section 468 of Cr.P.C.
Offence falls under the new Act, but not old Act - It is an admitted fact that the offence was committed under the old Companies Act, 1956 as the dividend declared in September 2012 and it was due for disbursement by 3-11-2012 and the new Companies Act came into force only in the year 2013. Though the complaint came to be filed in the year 2016, but the savings and repealed Act as per Section 465 of the Companies Act which was introduced or inserted only in the year 2020. Therefore, the complaint under the old Act has rightly filed as on the date of filing the complaint, Section 465 was not brought in the statute book. Therefore, the said contention by the petitioner counsel also is not sustainable.
Once the amount has been paid, the penal provision should be exonerated - Here in this case, there is a clear violation of the provision of law for non-depositing the amount within five days and also not disbursing within thirty days and it was paid nearly for three years. Even some of the payments were made after filing of the complaint. Such being the case, the penal provision cannot be exonerated and otherwise, there is no meaning in mentioning the penal provision under the statute book. Therefore, considering all these facts, petitioner has not made out the ground for quashing the criminal proceedings and on the other hand, they have to face the trial before the Court.
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2022 (5) TMI 1651
Validity of the assessment order passed u/s 147 r/w 144 and 144B - violation of principles of natural justice - as argued that since the notices were posted only in the Web Portal, there was no visible opportunity to the petitioner to respond the same, therefore, the petitioner may be permitted to treat the said notice as a fresh one - HELD THAT:- According to the petitioner, the show cause notice was not served on him and that the notices as well as the subsequent impugned assessment order were uploaded only in the web portal, which the petitioner was able to retrieve only belatedly. Therefore, this court is of the view that, if one chance is given to him, certainly, the petitioner/assessee would reply to the show cause notice and face the assessment.
The impugned order can be set aside and the matter can be remitted back to the respondents with a direction to the respondents to give one more opportunity to the petitioner to respond to the show cause notice - The impugned assessment order is set aside and the matter is remitted back to the respondents for reconsideration.
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2022 (5) TMI 1650
Validity of reopening of assessment - violation of the principles of natural justice as it has been passed without considering the reply as well as the supporting documents filed by the petitioner to the show cause notice - HELD THAT:- This Court is of the view that the petitioner-assessee has a right to be granted adequate time in accordance with the Act to file its reply. Since the petitioner is 70 years old, whose income tax affairs are handled by her husband, who is bed ridden and suffering from acute depression, this Court is of the view that the petitioner should have been granted further time to file her reply.
As pertinent to mention that Section 148A(b) permits the Assessing Officer to suo moto provide upto thirty days period to an assessee to respond to the show cause notice issued under Section 148A(b), which period may in fact be further extended upon an application made by the assessee in this behalf, and such period given to the assessee is excluded in computing the period of limitation for issuance of notice under Section 148 of the Act in terms of the third proviso to Section 149 of the Act.
Consequently, the order issued u/s 148A(b) as well as the notice issued u/s 148 of the Act are quashed and set aside.
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2022 (5) TMI 1649
Seeking grant of regular bail - white collar crime - misappropriation and fraud against the petitioner - HELD THAT:- The petitioner is accused of an offence which can be termed as white collar crime. It is pertinent to mention that as per the status report the petitioner has not cooperated in the investigation even after his arrest. One cannot lose sight of the fact that other co-accused persons are absconding. It is also not the case of the petitioner that the shares were not transferred by him. The allegations against the petitioner are serious in nature and as far as the contention of the learned senior counsel for the petitioner that charges have not been framed is concerned, it is evident that learned Trial Court has not taken the cognizance and has directed further investigation in the matter looking into its magnitude. Moreover, SEBI has also passed an order against the company of the petitioner. The cheated amount misappropriated which is more than Rs.200 Crores belongs to gullible public.
In Nimmagadda Prasad Vs. Central Bureau of Investigation, [2013 (5) TMI 920 - SUPREME COURT] the Supreme Court has observed that bail shall be granted by taking into consideration the facts and circumstances with gravity of offence.
There is no straight jacket formula for disposal of a particular bail application and each case has its own peculiar merits. In the given facts and circumstances of the case, the case law relied upon are not applicable to the facts and circumstances of the case in hand.
Keeping in view the aforesaid principles, the totality of facts and circumstances, particularly the gravity of allegations, nature of the crime and also keeping in view the fact that huge amount of public money is involved which is yet to be recovered and the investigation is still pending as learned Trial Court has allowed further investigation under Section 173(8) Cr.P.C., no ground for bail is made out, therefore, bail applications are dismissed.
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2022 (5) TMI 1648
Challenge to adverse decisions taken by the Appellant with respect to the arrangement regarding coal procurement entered into by the parties for the purposes of the Appellant's thermal power projects in the State of Karnataka - primary submission of the learned Senior Counsel appearing on behalf of the Appellant is that the High Court granted the relief without adjudicating the disputes between the parties or properly appreciating the facts in issue - HELD THAT:- It is worth noting that this Court has already held that in matters pertaining to a state instrumentality, a writ may be maintainable in matters concerning contractual disputes in certain circumstances. While there is no bar on the maintainability of such writ petitions, the discretion lies with the High Courts as to whether to exercise the said jurisdiction or not. This Court has elaborately discussed the principles that must guide the High Courts while deciding whether to exercise their writ jurisdiction in contractual disputes between a State and a private party in a catena of judgments.
No material has been placed on record by the Appellant to suggest that there was ever any problem with respect to the quality of coal being supplied by KEMTA to the Appellant. Rather, the impugned order suggests that coal supplied by KEMTA was utilized by the Appellant in its thermal power plants in order to generate electricity.
No material has been brought to the notice of this Court that would compel us to interfere with the impugned common judgment passed by the High Court in exercise of our jurisdiction Under Article 136 of the Constitution.
The Civil Appeals filed by the Appellant are dismissed.
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2022 (5) TMI 1647
Addition on account of suppression of interest income - discrepancy arose from the audit report filed by the assessee - HELD THAT:- Certainly the burden/duty on tax-auditor is very heavy/onerous under the 1961 Act to certify contents of tax-audit report to be ‘true and correct’ and not merely ‘true and fair’. Thus, if there was an inadvertent error committed by tax-auditor as is averred by the assessee , the assessee could have always approached tax-auditor to issue addendum/revised tax-audit report to certify correct figures after due checking’s /verifications by the tax-auditors, as the qualified Chartered Accountants who are appointed as tax- auditors being responsible officer/qualified professional, are expected to issue any addendum/revised tax-audit report with due care and caution with full responsibility , after thorough checking/verifications, otherwise it would call for disciplinary action from the ICAI and other consequences as provided under law. The assessee never produced the aforesaid addendum/revised tax-audit report from tax-auditor.
CIT(A) deleted the additions without calling for such information from the tax-auditors and then reconciling/verifying from the books of accounts, but merely deleted the additions .Needless to say that powers of ld. CIT(A) are co-terminus with powers of the AO. It is further observed that in same Part B- Annexure-I of tax-audit report, there is a cutting/overwriting in the figure of Net Profit/(Loss) before tax which is shown at Rs. 3,78,565/- (with over-writings), and such overwriting/cutting is not countersigned / authenticated by tax-auditor, and authenticity of such overwritten figure cannot be ascertained/relied upon , which also is required to be brought on record by the tax-auditor.
Thus, it will be just , fair and in the interest of justice that the appellate order of ld. CIT(A) be set aside and the matter be restored to the file of the AO for fresh determination of the issue. The assessee be directed to file revised tax-audit report/addendum to the tax-audit report and the AO to verify the same with books of accounts and other relevant evidences, to arrive at the correct income chargeable to tax. We clarify that we have not commented on the merits of the issue and all the contentions are kept open. AO is directed to pass reasoned and speaking order. The evidences /explanations submitted by the assessee shall be admitted by the AO in accordance with law and be decided on merits in accordance with law.
Addition on account of payments to contractors without TDS deduction -
- Payment by cheque’s which stood debited to its bank account - HELD THAT:- The assessee has submitted that these two persons are its employees, who were handling site for civil construction , and they have used the proceeds of these two payments for making labour payments and other charges for civil construction on behalf of the assessee, but evidences to substantiate are not filed, even their income tax returns along with computation, balance sheet, profit and loss account are not filed to substantiate its contentions.
As observed that labour charges outstanding to be payable as is reflected in the ledger account was as high as Rs. 25.10 lacs at the beginning of the year, and it rose to Rs.38.70 lacs at the end of the year, while average monthly wages payable to labourer credited as high as there are outstanding of wages payable for 7 months, which is against preponderance of probabilities that the labourer are not paid for 7 months. The ld. CIT(A) deleted additions without any evidences on record.
So, far as payment of Rs. 2,12,000/- is concerned , the said sum is paid through bank on 30.03.2011 , which is debited to the labour charges payable, and the assessee made the claim that these are tax payments and paid to Mr. O.P.Shukla,Client Account, no bank statement of Shri O.P.Shukla is filed and reasons / justification for debiting to Labour Charges Payable is not furnished.
It will be just fair and in the interest of justice that the appellate order passed by ld. CIT(A) be set aside and the matter be restored to the file of the AO for fresh determination of the issue . We clarify that we have not commented on the merits of the issue and all the contentions are kept open.
Appeal filed by the Revenue allowed for statistical purposes.
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2022 (5) TMI 1646
Addition for allotment of shares to the Indian entity u/s 56(2)(viib) - Valuation of equity shares at Rs. 59.99 per share following the DCF method assessee issued shares Rs 60 per share to non-resident share holder after necessary compliances under FEMA etc - Assessment of fair market value and share premium - AO has rejected the share valuation as computed under Rule 11UA of the Income Tax Rules, 1962 for the reason that the share issued to the resident company was much below the price at which shares were allotted to the non-resident company - AO observed that there was loss in the previous assessment years therefore, the value determined by DCF Method was not correct
HELD THAT:- AO has fallen in error in not considering objectively the facts and circumstances of the case as reflected in the joint ventures agreement between the resident and non-resident entity. This agreement holds the key for reasons why there was difference in valuation of the shares for each one of them. Clause 4.2.1 of the joint ventures agreement provided that initial share capital of the assessee company shall be by contribution of 5 lac shares from each and Clause 4.2.2 which is reproduced below for convenience, indicated how the project costs was to be funded in the ratio of non-resident, entity paying 40% of the project cost and the resident entity paying 60% of the project cost.
Joint ventures agreement there was difference in the share price as issued to the resident company and that to the non-resident company. The discounted factor has occurred due to difference in the shares of capital contribution to the project cost. In the case in hand AO without considering the relevant clauses of joint ventures agreement presumed that as there was difference in the valuation of share for resident and non-resident entity, so, the valuation given by prescribed expert is liable to be rejected.
Hon’ble Supreme Court of India in Duncans Industries Ltd. vs. State of UP [1999 (12) TMI 857 - SUPREME COURT] which is relied in Cinestaan Entertainment Pvt. Ltd. [2019 (6) TMI 1367 - ITAT DELHI] as relied by the Counsel for assessee, has held that question of valuation is basically a question of fact. Thus, where the law by virtue of Section 56(2)(viib) read with Rule 11UA (2)(b) makes the prescribed expert’s report admissible in evidence, then without discrediting it on facts, the valuation of shares cannot be rejected.
Here is a case where the AO has not disputed or questioned the financial, technical and professional credentials of the venturists for entering into the joint ventures agreement. AO without disputing the details of projects, revenue’s expected, costs projected has discredited the prescribed expert’s report which is admissible in evidence for valuation of shares and to determine fair market value.
CIT(A) has rightly gone into the merits of the facts while making an observation that as projected in the report of prescribed expert there has been marked improvement in the profit margins of the company in subsequent years and thus upholding the valuation done by the Assessee’s CA on DCF Method.
Lastly, there is also force in the contention for assessee that AO has accepted and rejected the valuation in respect of three entities differently. In regard to the assessee it was rejected, in case of non-resident entity it was accepted but distinguished and in case of resident entity also it was accepted, while holding that it was benefited by allotment of shares by under valuing. Such act of approbation and reprobation itself makes the exercise of statutory powers, liable to be set aside.
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2022 (5) TMI 1645
Nature of expenditure - deduction under the head “Data Automation Software Expenses” (EDA) - HELD THAT:- As nature of expenses is identical to the expenses that was considered by the Tribunal in Assessment Year 2008-09 [2020 (3) TMI 1195 - ITAT BANGALORE]. The Tribunal, after analyzing the terms of the agreement, has come to the conclusion that assessee acquired no right or interest of whatsoever in the EDA tools and had only the right to use software.
The use of the software was no doubt connected to the business but did not result in any asset coming into existence. Tribunal held that the expenditure was revenue in nature.. Following the aforesaid decision of the Tribunal, we uphold the order of the CIT(A) and dismiss ground No.2 raised by the Revenue.
Expenses on software licences and software from the parent company - As decided in own case [2022 (3) TMI 714 - ITAT BANGALORE], ITSS[Information Technology Support Service] cost is to be treated as revenue expense. Accordingly, the addition made by the AO in this regard by treating the said expenditure as capital, is deleted. In the result, these grounds of appeal are allowed - dismiss ground No.3 raised by the Revenue.
TP Adjustment - depreciation of Arm’s Length Price (ALP) in respect of international transaction of providing marking support services by the assessee to its AE - comparable selection - HELD THAT:- Companies were rightly regarded as functionally not comparable with assessee rendering MSS by the CIT(A).
TP Adjustment in the Software Development Services segment (SWD Segment) - international transaction with TI US, the assessee entered into a Bilateral Advance Price Agreement (BAPA) accepting profit margin of 17.50% - as asked rate agreed under BAPA in respect of international transaction with TI US should also be applied to the transaction with Natsem Malaysia - HELD THAT:- As neither the assessee or TPO have not made any distinction between US and Non-US AE transactions. In such circumstances, the margin accepted in MAP in respect of US AE transaction has to be regarded as Arm’s Length mark-up cost for the Non-US AE transaction also.
TP adjustment in the MSS segment - CIT(A) excluded 2 companies, Just Dial Ltd., and Killick Agencies and Marketing Ltd - HELD THAT:- Killick Agencies and Marketing Ltd., is concerned, we have already upheld exclusion of this company on the ground of functional comparability.
Order of the CIT(A) excluding Just Dial Ltd., was just and proper and calls for no interference as thus company is engaged in local search related services in India through multiple platforms. The nature of services rendered by this company is providing a list of available service providers and this cannot be equated to specific marketing support services which the assessee performs to its AE.
Comparability criteria to be adopted in TP cases - Revenue contended that it is not possible to have exact comparable companies as was sought to be demanded by the CIT(A) - As under Rule 10B(1)( e)(iii) profit margin realized by an unrelated enterprise from a comparable uncontrolled transaction has to be compared with the profit margin realized by the assessee carrying out the international transaction. Rule 10B(2) gives the comparability criteria which essentially talks about functions performed, characteristic of the property at service, contractual terms, conditions prevalent in the market, etc. In our view, the Revenue has raised a general ground without pointing out as to how the comparability criteria as laid down in the Rules have been violated. With these observations, we find no merits in the grounds raised by the Revenue in so far as it relates to TP adjustments in the MSS segment. The appeal of the Revenue is accordingly dismissed.
Nature of expenses - disallowance of information technology support services - HELD THAT:- We allow ground of the appeal of the assessee and hold that the expenditure in question is revenue expenditure.
Expenditure towards loans and advances written off in the profit and loss account - HELD THAT:- The claim was examined by the Revenue authorities in the light of the provisions of section 36(1)(vii) of the Act as bad debts written of which was rightly rejected by the Revenue authorities. The deduction was also examined under section 37(1) of the Act and was rejected by the Revenue authorities. The amount in question cannot be regarded as a capital expenditure because the capital asset never reached the assessee and got damaged in transit.
The loss cannot be regarded as a capital loss just because it was a sum paid for purchase of a capital asset. The loss in question in our view is allowable under section 28 r.w.s 29 of the Act as a loss incidental to the business of the assessee. We are therefore of the view that the Revenue authorities were not justified in not accepting the claim of the assessee for deduction. Case of Graphite India Ltd. [1996 (6) TMI 73 - CALCUTTA HIGH COURT] was squarely applicable as held that the expenditure was allowable as incurred wholly and exclusively for the purpose of the assessee's business.
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2022 (5) TMI 1644
CENVAT Credit - input service or not - imported Reinsurance Services - HELD THAT:- This Court has dismissed the appeal filed by the Revenue observing that there is no scope for deviating from the ratio in the case of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX & CUSTOMS, BANGALORE (ADJUDICATION) , THE COMMISSIONER OF SERVICE TAX VERSUS M/S. PNB METLIFE INDIA INSURANCE CO. LTD. [2015 (5) TMI 68 - KARNATAKA HIGH COURT] where it was held that 'In the present case, if the entire Service Tax which is collected by the Insurer, while selling its insurance policies, has to be deposited without being given the credit of the tax which is paid by it while procuring a policy of reinsurance as (mandatorily required in law), the same would be against the ethos of CENVAT credit policy, as the same would amount to double taxation, which is not permissible in law.'
This appeal has no merit, therefore, liable to be dismissed and the same is accordingly dismissed.
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2022 (5) TMI 1643
Penalty u/s. 271(1)(c) - defective notice - non strike out of the irrelevant portion - HELD THAT:- This issue has been considered in the case of CIT vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] in great detail wherein the defect in notice is treated as jurisdictional issue.
Even the Hon’ble Bombay High Court, Full Bench in the case of Mr. Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has considered exactly an identical issue. Even the Jurisdictional High Court in the cases of Babuji Jacob [2020 (12) TMI 574 - MADRAS HIGH COURT] and Original Kerala Jewellers, [2019 (2) TMI 127 - MADRAS HIGH COURT] has considered identical situation and held that the very initiation of penalty proceedings on a defective notice is invalid and it do not warrant imposition of penalty u/s. 271(1)(c) of the Act on the assessee. Appeal of the assessee is allowed.
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2022 (5) TMI 1642
Bogus purchases managed through bogus bills - bogus dealers don't carry any business activity either by way of purchase or sale of goods, transactions are carried out by issuing bills to the intending purchasers without any transfer of goods - CIT(A) deleted addition - HELD THAT:- It is undisputed facts that the assessee is indulging in bogus billing activities and at the same time respectfully following the decision ofM/S MOHOMMAD HAJI ADAM & CO. [2019 (2) TMI 1632 - BOMBAY HIGH COURT] where in it is held that the entire purchase amount of such bogus purchase cannot be added at best the addition limited to the extent of G. P. Rate on purchases at the same rate of the genuine purchase.
On being asked about the computation of separate G. P. Rate of these two activities the ld. AR of the assessee has submitted a chart which requires the detailed verification and since the said analyses has not been so far placed by the assessee before lower authorities we restore the matter back to the file of the assessing officer with a direction to tax the appropriate rate of G. P. which the assessee has adopted for other genuine purchase and sale transactions with this remark the grounds of the revenue is allowed for statistical purposes. At the same time assessee is also directed to submit the correct and full details as may be required by the assessing officer in this matter. Appeal of the revenue is allowed for statistical purposes.
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2022 (5) TMI 1641
Seeking grant of bail - Network Marketing Scheme - clubbing of all the FIRs registered in connection with the Network Marketing Scheme in different States - HELD THAT:- The FIRs registered subsequently in the State of Telangana and other States (except States of Haryana, Madhya Pradesh and Maharashtra), shall stand clubbed with the stated FIR No.710/2018 and treated as statement under Section 161 of the Code of Criminal Procedure. The investigating officer in criminal case arising from FIR No. 710/2018 will be free to file supplementary charge sheet after collation of all the records concerning other FIRs, which are clubbed in terms of this order. In the event, the Investigating Officer in other FIRs had already filed the Police report under Section 173 of the Code of Criminal Procedure before the concerned Court and the concerned Court had taken cognizance thereof, the said FIRs and criminal cases would also stand transferred and merged/clubbed along with case arising from FIR No. 710/2018, to be proceeded with in accordance with law. The investigating officer in the stated case (Principal case) will be free to file supplementary charge sheet on the basis of material collated during investigation of other FIRs.
If any accused has been granted bail in connection with the principal FIR or criminal case arising therefrom, in which the other FIRs/criminal cases will stand clubbed/merged in terms of this order, the bail so granted must enure in his/her favour (of such accused) until the Court of competent jurisdiction cancels the same owing to supervening circumstances including breach of bail conditions.
Petition disposed off.
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2022 (5) TMI 1640
Consolidation and clubbing of multiple FIRs in regard to Bike Bot Scheme - appointment of Special Investigation Team for conducting the Investigations - release from custody with respect to all the F.I.R.s emanating out of the Bike Bot Scheme registered within the jurisdiction of Uttar Pradesh, Delhi and at any other place without the knowledge of the Petitioner - grant of protection to the Petitioner in all the FIRs already lodged - HELD THAT:- The Petitioner(s) have filed some applications Under Section 340 of Code of Criminal Procedure to initiate action against the Investigating Agency. In the back drop of the indulgence shown to the Petitioner(s) in terms of this order, learned Counsel for the Petitioner(s), on instructions, submits that the stated applications filed before the Court of Chief Judicial Magistrate, Dadri, District Gautam Budh Nagar shall not be pursued and pressed.
The passport and the amount deposited by the concerned Petitioner(s) in the writ petition(s) in this Court or any other court as condition for grant of bail, along with accrued interest, if any, shall stand transferred to the Court of Chief Judicial Magistrate, Gautam Budh Nagar, Greater Noida, Uttar Pradesh and then abide by its order.
The writ petitions are partly allowed.
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2022 (5) TMI 1639
Misclassification of goods - Tape Ribbons Strips for labels (for industrial use) - classified under tariff item i.e. 58063190 or not - duty assessment based on revised invoice - Confiscation - redemption fine - penalties - HELD THAT:- It is not the case of the revenue that appellant had intentionally misdeclared the goods. In fact he has declared the goods as per the purchase order, invoice and packing list of the supplier. This fact is also established by the fact that he had actually made the payments to the foreign supplier as per the purchase order and invoice treating the impugned goods to be made of Cotton. All these facts if taken into account would establish that appellant had not caused any fraudulent or false document to be filed before the Custom Authorities at the time of filing the Bill of Entry. It also point to the fact that there was certain errors were made by the foreign supplier by shipping the goods of polyester against the invoice declaring the same to be made of Cotton. Supplier did not deny the error made and admitted the same.
The findings are contrary to the assessment finalized determining the duty payable to be less than the duty assessed on Bill of entry originally filed by the Appellant. Commissioner (Appeals) has in his order directed assessment to be made as per the revised invoice which revises the value downwards. Further when the appellant had filed the B/E as per the documents which are true as per his information and knowledge penalty imposed cannot be justified as he has not ‘knowingly and intentionally’, filed the documents which department claim to be erroneous. Hence penalty under section 114AA cannot be justified.
It is agreed that certain incomplete descriptions were made in the bill of entry for which the goods became liable for confiscation under Section 111 and appellant liable for penalty under Section 112 (a) - But without much justification for such errors which have been committed by the foreign supplier the redemption fine and penalties imposed in terms of Section 125 and section 112 (a) seem to be on higher side - the ends of justice will suffice if the Redemption fine is reduced from Rs. 1,50,000/- to Rs. 50, 000/- and penalty from Rs. 60,000/- to Rs. 30,000/-.
Petition allowed in part.
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2022 (5) TMI 1638
Condonation of delay of 568 days in filing appeal - sufficient cause for delay or not - it was held by High Court that 'This Court, therefore, is of the view that the explanation which has been furnished by the State appellant in the delay condonation application, cannot be said to be a sufficient cause to condone the inordinate delay.' - HELD THAT:- There are no reason to interfere with the impugned judgment.
SLP dismissed.
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2022 (5) TMI 1637
Acquisition of lands for the benefit of New Okhla Industrial Development Authority ("NOIDA") and Greater NOIDA - Additional Compensation to Farmers - Allotment of Developed Land - Amendment in Abadi Rules - Recommendations of the Chaudhary Committee - Distinction between Ancestral and Non-Ancestral Land - Construction of Entry and Exit Ramps - Challenged the demand of additional amount made by the Appellant herein-Yamuna Expressway Industrial Development Authority ("YEIDA") in respect of plots of land leased out to the allottees -
HELD THAT:- If we apply the principle as laid down in the case of Kasinka Trading [1994 (10) TMI 64 - SUPREME COURT] to the facts of the present case, it will be clear that the policy decision of the State Government was not only in the larger public interest but also in the interest of the Respondents. The projects were stalled on account of the farmers' agitation. The farmers felt discriminated as they found that the compensation paid to them was much lesser than the one being paid to the equally circumstanced farmers in NOIDA and Greater NOIDA. It was the allottees of the land who had approached the State Government for redressal of the problem.
In these circumstances, the Government took cognizance of the problem and appointed the Commissioner to look into the issue. Since the Commissioner recommended appointment of a High-Level Committee, the Chaudhary Committee was appointed. The Chaudhary Committee had thread bare discussions with all the stakeholders. It also took into consideration that on account of stay orders passed by the High Court in various writ petitions, the development of the project was stalled. On account of pendency of the writ petitions, there was always a hanging sword over the entire acquisition of it being declared unlawful.
In this premise, in order to find out a workable solution and that too, on the basis of the law laid down by the High Court in the case of Gajraj [2011 (10) TMI 753 - ALLAHABAD HIGH COURT] as affirmed by this Court in the case of Savitri Devi [2015 (5) TMI 1219 - SUPREME COURT] and followed by this Court in the case of Savitri Mohan (Dead). [2016 (6) TMI 1483 - SUPREME COURT] recommendations were made by the Chaudhary Committee. The Chaudhary Committee specifically recommended that the additional compensation and other incentives would be paid only if the landowners agree to handover physical possession of the land to YEIDA and withdraw all the litigations.
We are therefore of the considered view that the policy decision of the State Government was in the larger public interest. It was taken considering entire material collected by the Chaudhary Committee after due deliberations with all the stakeholders. The factors which were taken into consideration by the State Government were relevant, rational and founded on ground realities. In this view of the matter, the finding of the High Court that the policy decision of the State Government was arbitrary, irrational and unfair, is totally incorrect.
It can thus be seen that even insofar as the individual residential plot owners are concerned, more than 98% of the plot owners do not have any objection to the payment of the additional compensation.
We are of the considered view that the policy decision of the State Government as reflected in the said G.O. dated 29th August, 2014 and the Resolution of the Board of YEIDA dated 15th September, 2014 were in the larger public interest, taking care of the concerns of the allottees as well as the farmers. As already discussed, had the said decision not been taken, there was a hanging sword of the acquisition being declared unlawful. The development of the entire project was stalled on account of farmers' agitation. Before taking the policy decision, the State Government, through the Chaudhary Committee, had done a wide range of deliberations with all the stakeholders including the allottees, farmers and YEIDA. The policy decision was taken after taking into consideration all relevant factors and was guided by reasons.
In any case, it is a settled position of law that in case of a conflict between public interest and personal interest, public interest will outweigh the personal interest. The High Court was therefore not justified in holding that the policy decision of the State was unfair, unreasonable and arbitrary. We are of the considered view that the High Court has erred in allowing the writ petitions. The present appeals, therefore, deserve to be allowed.
The appeals were allowed, and the impugned judgment of the Allahabad High Court was quashed. The writ petitions filed by the respondents were dismissed, and the applications for intervention were allowed. The Court emphasized that public interest outweighs personal interest, and the policy decision was justified and equitable.
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2022 (5) TMI 1636
Challenge to Notification dated 13.04.2018 issued by the appropriate authority in exercise of powers Under Section 87 of Punjab Reorganisation Act, 1966 - whether Clause (a) of the third proviso inserted in terms of paragraph 6 of the impugned Government Order/Notification dated 13.04.2018 can be regarded as peripheral or insubstantial change to the provisions of the Punjab (Regulations of Fees of Unaided Educational Institutions) Act, 2016, which have been extended vide impugned notification issued in exercise of powers Under Section 87 of the 1966 Act?
HELD THAT:- It would be a different matter if the Parliament or the State Legislature, as the case may be, were to incorporate such condition in the enactment such as the 2016 Act. Had it been so incorporated, it would then be open to the unaided institutions to question the validity of such a provision, which could be tested by the Constitutional Court on the basis of doctrine of fairness, arbitrariness and other grounds available under Part III of the Constitution of India or otherwise.
Suffice it to observe that the change introduced vide the impugned Government Order/Notification in terms of Clause (a) in the third proviso inserted by way of paragraph 6 thereof, is not a peripheral or insubstantial change. Hence, it is clearly outside the scope of the authority bestowed on the competent authority in terms of Section 87 of the 1966 Act. That stipulation, therefore, needs to be struck down being ultra vires - Reverting to Clause (b), it is found that the challenge to Clause (b), is tenuous. In that, this stipulation merely prohibits the unaided institutions from charging any kind of cost from the parents. This is consistent with the legislative intent and mandate of the 2016 Act. In fact, it restates the inbuilt policy, essence and substance of the 2016 Act. Thus, it is in no way a substantial change as in the case of Clause (a) - challenge to Clause (b) of the third proviso inserted by virtue of Government Order/Notification by way of paragraph 6, cannot be countenanced and is rejected.
That takes to the challenge to paragraph 8 of the impugned Government Order/Notification, whereby the penalty amount is enhanced in respect of unaided institutions governed by the 2016 Act within the Union Territory in terms of impugned Government Order/Notification. Again, this is not a peripheral or insubstantial alteration or modification of Section 14. Inasmuch as, what should be the quantum of penalty amount or punishment, is a legislative policy. It must be left to the concerned legislature. It cannot be provided by way of an executive order, including in exercise of powers Under Section 87 of the 1966 Act-being a substantial change to the regime predicated in Section 14 of the 2016 Act. - Thus, paragraph 8 of the impugned Government Order/Notification also cannot stand the test of judicial scrutiny. Hence, the same needs to be struck down being unconstitutional and ultra vires.
The appeals are partly allowed.
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2022 (5) TMI 1635
Smuggling of Exotic live tortoises - Transportation of Tortoises of African origin, have been moved into India through Bangladesh - Confiscation - Penalty - Admissibility and reliability of statements of co-accused - Validity of call detail records as evidence - Relevance of fuel slip as evidence - HELD THAT:- The witnesses were not examined viz. Balram Naiya and Kaushik Kumar Das, in the adjudication proceedings and further, in spite of request by this appellant, they were not produced for cross examination. Thus, no reliance can be placed on such statements, for not following the mandate of law.
So far the call detail records are concerned, ld. Counsel has filed the copy of the ‘RUDs’, which include ‘call detail records’, which are collected by the Revenue. Ld. Counsel demonstrates that as per call detail records, as made from Mohd. Khalid to this appellant on 24.11.2018 at 1815 hrs., the tower location of the appellant is at Kolkata. On the same day, this appellant had made a call to Mohd. Khalil at 16.02 hrs and the tower location of Mohd. Khalil is outside Kolkata. Thus the allegation of the Revenue that on 24.11.2018 in the afternoon, this appellant was present in Nadia District near the Indo Bangladesh border, is without any basis and only by way of wild allegation, which is not substantiated and rather demolishes the evidences on record.
So far the third allegation relied upon by the Revenue ‘on fuel slip’ issued on 25.11.2018, the appellant had led the evidences at the time of adjudication proceedings, by filing the copy of the cash memo no.719 dated 25.11.2018 issued by ADCO Motor Pvt. Ltd., which was issued for filling the fuel in the vehicle No.WB 18 S6688 at 1416 hrs. for an amount of Rs.2824.21. Thus, reliance placed by the Revenue on the Teller /P.O.S. Slip for the same amount of the same date, and alleged that it was for filling the fuel in the seized vehicle, has got no legs to stand, is rather not on the basis of the facts on record.
Although there is suspicion against this appellant on the basis of the statement of the co-accused, but in view of the aforementioned discussion, I find that the Revenue has erred in relying upon the three aforementioned evidences, which do not stand the test, and rather found to be wild allegation without any cogent basis.
So far the statement of co-accused is concerned, the same cannot be relied upon in absence of corroborative evidences, as held by the Hon’ble Supreme Court in the case of Vinod Solanki Vs. Union of India [2008 (12) TMI 31 - SUPREME COURT]. Accordingly, I allow this appeal and set aside the impugned order so far this appellant is concerned. Thus, the appeal is allowed.
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