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Showing 601 to 620 of 420376 Records
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2024 (11) TMI 1022
Treatment to income surrendered - Additional income declared during course of survey proceedings - additional income which was offered in the return of income under the head ‘Income from other sources’ - AO treated it as income from unexplained sources’ and to be added u/s 68 r.w.s. 115BBE - assessee explained that the amounts in question are nothing but income from land business which are received in cash and are over and above the regular income. Thus, the source of income has clearly been explained as out of business and not from any other activities - HELD THAT:- A perusal of the assessment order clearly shows that the assessee has categorically given the details of the land with survey number etc from which he has received excess cash which was not recorded in the books of account and which was surrendered during the course of survey and offered in the tax return. Thus, the assessee has categorically stated the nature and source of income during the course of survey itself which was offered to tax in the return filed. Under these circumstances, we have to see as to whether the provisions of sections 68, 69, 69A, 69B, 69C or 69D r.w.s. 115BBE of the Act are to be attracted or not.
As decided in the case of Hari Narain Gattani [2020 (10) TMI 559 - ITAT JAIPUR] that where the assessee surrenders undisclosed income during search action for relevant year, it is not necessary that tax rate has to be charged as per provision of section 115BBE.
We find in the case of Bajaj Sons Ltd. [2021 (5) TMI 956 - ITAT CHANDIGARH] has held that where director of assessee-company surrendered a certain sum during search and the Assessing Officer treated said sum as income from unexplained sources and invoked provisions of section 115BBE and charged tax at a higher rate, since the Assessing Officer had not pointed out any unexplained credit in the books of account, provisions of sections 68, 69, 69A, 69B, 69C and 69D were not attracted on surrendered amount and aforesaid surrender not being covered under the provisions of sections 68, 69, 69A, 69B, 69C and 69D, provisions of section 115BBE were not attracted. Assessee appeal allowed.
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2024 (11) TMI 1021
Penalty u/s 271(1)(c) - defective notice u/s 274 - no specific limb of the penalty indicated - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that notice dated 24.11.2016 u/s 274 r.w.s. 271 (1)(c) of the Act was issued to the Assessee wherein, no specific limb of the penalty indicated i.e., whether it is for concealment of particulars of income or for furnishing of inaccurate particulars of income, which is not sustainable in the eyes of law and illegal, as per the settled law. Assessee appeal allowed.
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2024 (11) TMI 1020
Addition u/s 68 - Bogus share transaction - assessee had carried out the transactions have been alleged to have been indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker - HELD THAT:- Since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee.
We noticed earlier that the AO has assessed the sale consideration of shares as unexplained cash credit u/s 68 of the Act. It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the Revenue. The sale of shares has taken place in the online platform of the Stock Exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 of the Act.
Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and direct the AO to delete the addition made u/s. 68 of the Act relating to sale consideration of shares. Decided in favour of assessee.
Assessment of the deposits made into the bank account and disallowance of claim of interest expenditure u/s 24 - In the interest of natural justice, we set aside the order passed by the Ld.CIT(A) on both these issues and restore them to the file of the AO for examining them afresh. We also direct the assessee to fully co-operate with the AO for expeditious completion of assessment.
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2024 (11) TMI 1019
Addition u/s. 41(1) - addition on account of unproved Sundry Creditors holding that existence of liabilities is not proved - evidence that the liability has ceased to exist and that too in the year under appeal or not? - Revenue’s endeavour to invoke section 68 - HELD THAT:- AO had held the assessee not to have proved identity, creditworthiness and genuineness despite availing various opportunities. He therefore concluded in para 5 of the impugned credits lacked genuineness which inturn, represented the assessee’s sundry credits only, in the regular course of business. Learned departmental representative could hardly dispute the clinching fact emerging from the assessee’s paper book that it had duly filed all the relevant details of the said sundry credits which also had been having opening balances as well as settlement(s) finalized in the relevant previous year and afterwards.
Sofaras the Revenue’s endeavour to invoke section 68 herein is concerned, we do not find any discussion in the assessment order as to how the assessee’s relevant details had failed to discharge its onus even if it is presumed that this not an instance of cessation of liability u/s. 41(1) of the Act. We conclude in these peculiar facts and circumstances that be it section 41(1) cessation of liability addition or that section 68 unexplained cash credits, the learned Assessing Officer could not have made the impugned addition in assessee’s hands on both counts. Rejected accordingly.
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2024 (11) TMI 1018
Addition on account of cash deposited in bank account - Addition u/s.69A on account of unexplained cash deposit - AO’s allegation that assessee has shown inflated cash sales - HELD THAT:- Assessee is a Wholesaler for Sapat Brand Tea. During the assessment proceedings, assessee had explained that the amount deposited was out of the Opening Cash Balance and Sales made. However, AO rejected assessee’s submission and made the addition.
As observed from the above table that during the month of October & November, there has been substantial increase in the Cash Sales of the assessee in all the three Financial Years. Assessee claimed that these were the months of Festivals. Therefore, AO’s allegation that assessee has shown inflated cash sales during October, 2016 to deposit his unaccounted cash is unsubstantiated. Because, consistently there is increased cash sales as compared to other months. It is also a fact that assessee’s Books of Accounts are audited.
The Audit Report along with Profit and Loss Account, Balance Sheet and its Annexures were filed before the Assessing Officer. AO has not pointed any defect in these Books of Accounts or Audit Reports. CIT(A) has also not pointed out any defect in the Audit Report. Assessee had also filed copy of all the bank statements before the Assessing Officer.
There were regular cash deposits even before the Demonetization. Assessee had submitted before the AO details of monthly cash sales, details of monthly purchases. Assessing Officer has not doubted Assessee’s purchases or sales. The entire sales and purchases are reflected in the Profit and Loss Account and AO has not brought out on record any evidence to rebut the assessee’s claim. AO has merely made addition based on surmises and conjectures.
Thus, AO’s allegation that cash deposited on 11.11.2016 and 15.11.2016 are out of unaccounted sales is baseless. We have already reproduced the details of cash sales shown by the assessee much before the Demonetization. Therefore, in these factual background, there is no reason to doubt the cash deposits made on 11.11.2016 and 15.11.2016. Assessee appeal allowed.
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2024 (11) TMI 1017
Upward TP adjustment on account of AMP expenses - HELD THAT:- We find an identical issue raised in assessee's own case for assessment year 2012- 2013 [2023 (3) TMI 656 - ITAT BANGALORE] which subsequently followed in A.Y. 2017-18 [2022 (12) TMI 1542 - ITAT BANGALORE] - The Tribunal in assessee's own case followed the dictum laid down in the case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT], case of Sony Ericsson Mobile Communications India (P.) Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT] directed the A.O. to delete the AMP TP adjustment and the mark up thereon wherein held that if an Indian entity has satisfied the TNMM i.e. the operating margins of the Indian enterprise are much higher than the operating margins of the comparable companies, no further separate adjustment for AMP expenditure was warranted.
This is also in consonance with Rule 10B which mandates only arriving at the net profit by comparing the profit and loss account of the tested party with the comparable. As far as MSIL is concerned. its operating profit margin is 11.19% which is higher than that of the comparable companies whose profit margin is 4.04%. Therefore, applying the TNMM method it must be stated that there is no question of TP adjustment on account of AMP expenditure - Appeal of the revenue is hereby dismissed.
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2024 (11) TMI 1016
Tax relief in regard to income earned in Japan, Nepal and Singapore - Income earned by the assessee from professional services in forieng countries - HELD THAT:- As perused the decision of Amarchand & Mangaldas & Suresh A. Shroff & Co. [2023 (6) TMI 1445 - ITAT MUMBAI] pertaining to AY 2017-18 wherein the provisions of Article 12 and Article 14 of the India- Japan Double Taxation Avoidance Agreement are discussed and it is held that Article 12 of the DTAA provides that income from professional services or other activities of independent characters would be taxable in the resident country, i.e., India. However, clause 4 of the Article 12 provides that such payments would not constitute ‘fee for technical services’ only if such payment is made to an individual for carrying out independent professional services referred to in Article 14. Thus conclusions arrived at by the Japanese tax authorities, directing tax withholdings from the payments made to the assessee by its Japanese clients, cannot be said to unreasonable or incorrect, and hold that the assessee was wrongly declined tax credit on the facts of this case
Thus, we find merit in the submission of the assessee and allow the claim of deduction. Decided against revenue.
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2024 (11) TMI 1015
Disallowance of interest on his own funds - AO found that the assessee has paid interest @ 12% to the people from whom he had borrowed the money and received interest @ 12.5% from the company whom he had lent the money - HELD THAT:- The undisputed fact is that the assessee had lent money out of the borrowed funds. Assessee was charging interest @ 12.5% and was paying interest @12%. It is also not in dispute that the assessee has lent out funds out of borrowed capital till October, 2017 on which gross interest received - Thereafter, since November, 2017, the assessee has lent money out of his own funds.
The total interest paid by the assessee was Rs. 2,42,26,347/-. Thus, the assessee was eligible for claim of deduction of interest payments totaling to Rs. 2,42,26,347/-. However, a perusal of the computation of income shows that the assessee has claimed deduction of interest only to the extent of Rs. 2,02,76,955/- which means that the assessee has suo moto disallowed Rs. 39,49,392/-, which can cover all the apprehensions of the AO. Therefore, no reason for a further disallowance of Rs. 63,48,487/-. The AO is directed to delete the disallowance.Decided in favour of assessee.
Maturity profits from Keyman Insurance Policies which was taxed as profit in lieu of salary - We are of the considered opinion that on identical set of facts, the Co-ordinate Bench in the case of Mihir Parikh [2024 (2) TMI 1194 - ITAT DELHI] wherein held benefit inured owing to the combined effect of a prudent investment and statutory exemption provided under Section 10(10D) of the Act, the section does not envisage of any bifurcation in the amount received on maturity on any basis whatsoever. Nothing can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation.Therefore, in the light of above-mentioned binding precedents, we are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. Decided in favour of assessee.
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2024 (11) TMI 1014
Revision u/s 263 - Section 50C applicable to a charitable trust - AO has not considered the value of the property as per provisions of Section 50C and therefore, difference between the stamp duty value and transaction value was not examined by the AO and no explanation was submitted by the assessee - HELD THAT:- It is apparent that the assessee has offered capital gain in assessment year 2017 – 18, the property was transferred in that year, property got registered in current assessment year. The capital gain offered by the assessee have been assessed to income tax in assessment year 2017 – 18 under section 143 (3) of the act. Therefore, even if, the action u/s 263 is required to be taken, it should have been taken in assessment year 2017 – 18 and not in assessment year 2018 – 19.
Even otherwise in the case of the assessee, a trust, according to provisions of section 11 (1 A) where a capital asset is sold, transferred, the net consideration is required to be utilized for acquisition of another capital asset in those circumstances, the net consideration is deemed to have been applied for charitable purposes to the extent consideration is utilized. Net consideration is defined in explanation (iii) meaning the full value of the consideration received or accruing as a result of the transfer of the capital asset. Therefore, there is no provision under section 11 (1A) to substitute the net consideration with full value of the deemed consideration.
Section 50 C of the act applies only for the purposes of computation of capital gain under section 48 of the act. Provisions of section 48 of the act does not apply to a charitable trust in view of provisions of section 11 (1A) of the act, so far as the facts of this assessee are concerned.
Though assessee has relied upon several judicial precedents to support its case that in case of a charitable trust provisions of section 50 C does not apply, but even on the facts of the present case also we do not find that there should have been any addition on account of stamp duty value of the property in assessment year 2018-19, when the property is transferred in assessment year 2016 – 17 and revenue has accepted the same by framing an assessment order u/s 143 (3) of the act. Therefore, even otherwise, the stamp duty value of the property would not have any impact on the income of the assessee for assessment year 2018 – 19. Thus, the order itself is not prejudicial to the interest of revenue.
Therefore, we do not find that the assessment order passed by the learned assessing officer for assessment year 2018 – 19 is erroneous insofar as prejudicial to the interest of the revenue - Assessee appeal allowed.
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2024 (11) TMI 1013
Absolute confiscation of Areca Nuts imported - report received from National Food Laboratory, Ghaziabad reflected that the Areca Nuts were found with presence of visible fungal growth and musty, which did not confirm to the standards laid down under Regulation 2.3.55. of the Food Safety and Standards, Regulations, 2011 - case of the Revenue that as per the prior intelligence received by DRI, certain importers were engaged in malpractice of mixing consignments of Areca Nuts of Sri Lanka origin with that of shipments originating outside the SAARC territory and paying nil basic customs duty on the basis of notification dated 01.03.2000 - Goods found to be ‘substandard’ in terms of Section 3(1)(zx) and unsafe food as per Section 3(1)(zz)(x)(xi)(xii) of the Food Safety and Standards Act, 2006
Whether the Tribunal has erred in setting aside the order in original and order in appeal whereby the absolute confiscation of the Areca Nuts imported by the respondents was ordered? - HELD THAT:- CESTAT hears an appeal, and therefore, all the arguments including the submissions relating to decision on Regulation 10 (11) of the Regulations 2017 can be examined by the Tribunal. Scope of Tribunal is wide enough to examine whether the discretion exercised by the authority was legal and proper. It can also take a different view after examining the reasons taken into consideration by the concerned authority.
In the present case, the CESTAT found that the Areca Nuts may not be fit for human consumption, but the same are of such a nature which can be used for ancillary and industrial purposes by its original consignee or seller. Having reached to such a conclusion, it decided to direct the authority to allow the re-export of the food items which is provided as one of the option available under Regulation 10 (11) of the Regulations 2017. It, therefore, has interfered with the discretion exercised by the concerned authority and directed for re-export.
We also do not find force in the arguments raised by learned counsel for the appellant with regard to reducing of fine of Rs. 2 crores to Rs. 25 lacs and personal fine of Rs. 10 lacs, as no reason has come forward for imposing such a harsh fine. More so, when we find that the goods were sent by the seller to the importer without there being any participation of the importer in receiving substandard Areca Nuts. We, accordingly, reject the aforesaid submission of learned counsel for the appellant also.
We also find that the CESTAT has also examined the wasteful outflow of foreign exchange from Indian Importers for Foreign Buyers as one of the reasons for allowing the re-export. We find such reason to be sound and in accordance with public policy. We, therefore, do not find any ground to warrant interference. The appeals filed by the Revenue are found to be without merit and are accordingly dismissed.
If the goods have not been allowed to be re-exported, the authority shall now allow them to be re-exported forthwith.
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2024 (11) TMI 1012
Maintainability of the appeals before this Tribunal - appeals before the wrong Forum - Appellate Tribunal Jurisdiction to deal with appeals related to drawback claims - HELD THAT:- A perusal of proviso (c) to Section 129A reproduced above clearly indicate that this Tribunal has no jurisdiction to deal with appeals related to drawback matters.
We observe that this issue has been dealt in the case of Commissioner of Customs, Air Cargo Export v. Sans Frontiers [2023 (12) TMI 695 - DELHI HIGH COURT] wherein the Hon'ble Delhi High Court has held that Appeal to CESTAT against order of Commissioner (Appeals) with respect to recovery of duty Drawback on exported goods is not maintainable as per Section 129A of Customs Act, 1962. Also affirmed by the Hon’ble Apex Court [2024 (5) TMI 1488 - SC ORDER].
We also find that the same view has also been held in Arihant Overseas [2024 (5) TMI 212 - DELHI HIGH COURT] wherein as held that in terms of Section 129DD of the Customs Act, 1962, the remedy against such orders is by way of a Revision to Central Government.
We observe that the appellant has filed these appeals before the wrong Forum and hence these appeals are not maintainable before this Tribunal. As it is a genuine mistake, we observe that the appellant should not be penalised for filing appeal before the wrong forum. Accordingly, we grant ‘leave’ to the appellant to file the Revision Applications against the impugned Orders passed by the Commissioner (Appeals) before the Government of India as per Section 129 DD of the Customs Act, 1962, along with condonation of delay.
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2024 (11) TMI 1011
Determination of transaction value - department said that the transaction value declared by respondents is not correct and therefore, they have enhanced the declared value and demanded the differential duty - HELD THAT:- Even though the respondents had pointed out certain reservations about contemporaneous prices relied upon by the department, the Commissioner (Appeals) has not analyzed or made any specific observation on the submissions made by the respondent before the Commissioner (Appeals).
It is noted that the queries raised by the department in relation to the impugned bills of entry as well as replies made thereto by the respondents are also not on record. Therefore, it is not possible to conclude as to what are the nature of replies and the grounds on which the department doubted the veracity of the declared transaction value and the defence taken by the respondents to justify the correctness of the transaction value.
We find that the orders of the Commissioner (Appeals) are not speaking orders and it has not considered certain factual matrix which has got bearing on the outcome of this case. Therefore, the orders of the Commissioner (Appeals) are set aside and the matter is remanded back to the Original Assessing/Adjudicating Authority, who will give opportunities to the importer to produce all the evidence to justify the correctness of the declared transaction value in view of the queries raised by the Department.
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2024 (11) TMI 1010
Liquidation of Corporate Debtor - seeking for issue of an appropriate direction to the liquidator to put on hold the auction of the immovable asset of the Corporate Debtor, to consider his proposal to sell the Corporate Debtor as a going concern - It is the contention of the Appellant that his Resolution Plan was rejected without due diligence - principles of res-judicata - HELD THAT:- This Application came up for consideration before the Learned Adjudicating Authority and the Learned Adjudicating Authority after considering the text of the relief sought in IA No.140/2022, had dismissed by observing that it was on the same grounds / prayers the Appellant had already approached before the NCLAT by filing IA No.436/2021 in CA (AT) (CH) (Ins) No.314/2020 which has been rejected, that the relief as sought for in IA No.140/2022 has already been denied by the NCLAT while deciding IA No.436/2021, that, the Appellant has suppressed the material fact regarding the orders passed on IA No.436/2021 in CA (AT) (CH) (Ins) No.314/2020, and therefore, the relief as it was sought for in IA No.140/2022 would not be tenable owing to the bar created by the decision taken on IA No.436/2021 preferred in CA (AT) (CH) (Ins) No.314/2020. Apart from the aforesaid reason, the Learned Adjudicating Authority has concluded that the relief sought for by the applicant by invoking the provisions contained under section 60(5) of the Insolvency and Bankruptcy Code, 2016 to be read with Rule 11 of the NCLT Rules cannot be granted to the Appellant for the following reasons.
(1) The Resolution Plan which was submitted by the Appellant was already rejected.
(2) The Application filed for modification of the Resolution Plan also stood rejected vide Order dated 30.12.2019.
(3) More importantly, the two orders affirming the rejection of the Resolution Plan was not challenged by the Appellant by invoking the provisions contained under Section 61 of the Insolvency and Bankruptcy Code, 2016 and the same would attain finality, against the Appellant.
(4) Once the rejection of the Resolution Plan submitted by the Appellant had attained finality no cause of action would survive qua the Appellant for filing this instant Appeal as against the order passed in IA No.140/2022.
Besides this, the relief itself as prayed for would be barred by the principle of Res judicata because the same already stood denied by the NCLAT vide its order dated 20.09.2021 passed in IA No.436/2021. In view of the above and primarily on the ground that in the absence of the challenge given to the order of rejection of the Resolution Plan submitted by him, the Appellant relinquishes his right to put a question to an order of appointment of liquidator, as well as, to seek for the relief he has sought in IA No.140/2022, which is the subject matter of Comp App (AT) (CH) (Ins) No.329/2022.
For the aforesaid reasons, this Appeal too would stand dismissed.
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2024 (11) TMI 1009
Oppression and Mismanagement - invocation of provisions contained under Section 96, 173, 241, 244 of the Companies Act of 2013 - Applicability of Section 8 of the Arbitration and Conciliation Act, 1996 - Appellant/ Respondent, had not produced the “Original Copy of the Agreement, nor the Appellant has supplied the certified copy of the said agreement - whether the Authenticated copy of the agreement as filed by the appellant in support of IA No.65/2019, could at all be read in parlance to the certified copy of the Arbitration Agreement or the Original of the Arbitration Agreement? - HELD THAT:- Obviously, under law the certification of a document has to be in accordance with the provisions of Registration Act to be read with Section 76 of Evidence Act, and particularly in the context of the provisions contained under Section 17 of the Registration Act, where certain documents will be inclusive of the present agreement as it dealt with the Subscription of the Shareholders, which itself is a property under law, which had to be mandatory required to be registered and if that be so, in that eventuality when the application under Section 8 of the Act of 1996, was preferred by the Appellant, it ought to have been accompanied with the certified copy of the agreement at the stage, when the initial objection of 10th October 2018 was filed by the Appellant/Respondent, in opposition to the Company Petition. In that view of the matter and for the said reasons, the “authenticated copy” cannot be treated as to be a “certified copy”, which could have been read in evidence under Section 47 of the Registration Act for the purposes to satisfy the restrictions imposed by Sub-Section (2) of Section 8 of the Arbitration and Conciliation Act, 1996.
No such application under Section 8 of the Act of 1996, was filed before National Company Law Tribunal, Amravati Bench, to derive an objection with regards to the maintainability of the proceedings of the Company Petition, under Sections 96, 173, 241 to 244 of the Companies Act. The aforesaid principle literally and in its legal terms, as to what derivation could be made with regards to the certified copy in fact, has been prescribed under the National Company Law Tribunal Rules, where a certified copy would be a copy which has been obtained after compliance of the provisions contained under Section 76 of the Evidence Act”. Since the same has not been complied with, the application under Section 8 was held to be not maintainable because it will not be falling to be, a certified copy under Sub Rule (9) of Rule 2 of the National Company Law Tribunal Rules, which deals as to what would be the certified copy.
There is another logic and which has been rightly attracted by the Learned Adjudicating Authority, at the stage of considering the application under Section 8, by drawing an inference from the Judgment reported in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., & Ors. [2012 (10) TMI 459 - SUPREME COURT], where it has been observed that since the Arbitration Proceedings, being a consented chosen forum between the consenting parties for the redressal of the dispute, it will not be taken as to be “Judicial Proceedings” so as to create an embargo for filing of a Company Petition, as it would be relatively a “Private Forum”, which cannot deceive the objective of the Procedural Law under the Companies Act, to be read with Insolvency and Bankruptcy Code.
The Application thus preferred being IA No.65/2019, by the Appellant in the Company Petition, didn’t satisfy the parameters prescribed under Section 8 of the Act of 1996, and the legislative bar was created in even entertaining the Application in the absence of satisfying the parameters to sustain the proceedings because the certified copy or the original copy of the Agreement was not filed. Therefore no such proceedings could have been even entertained by the National Company Law Tribunal, Amravati Bench by way of IA No.65/2019 and in these circumstances, when the Law creates a bar in even entertaining of any such Application under Section 8 of Act of 1996, the same would not be maintainable.
The Company Appeal lacks merit and the same is dismissed.
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2024 (11) TMI 1008
Amendment of scheme of amalgamation - section 230-232 read with section 234 of the Companies Act, 2013 - Jurisdiction of NCLT to modify the scheme - HELD THAT:- The amendment can therefore be done at any stage. In IN THE MATTER OF :. HAMBURG SUD INDIA PRIVATE LIMITED, MAERSK LINE INDIA PRIVATE LIMITED [2023 (3) TMI 1541 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV], the Ld NCLT Mumbai while seized of a First Motion Petition passed directions for changing the valuation and the swap ratio.
Admittedly the present modification to scheme will not require any further / revised adherence in so far as the regulations for inbound merger are concerned. Further, as per FEMA Notification No. FEMA.389/2018-RB dated March 20, 2018 ‘Foreign Exchange Management (Cross Border Merger) Regulations, 2018’, point 9(1) states any transaction on account of a cross- border merger undertaken in accordance with these Regulations shall be deemed to have prior approval of the Reserve Bank of India as required under Rule 25A of the Companies (Compromises, Arrangement and Amalgamations) Rules, 2016. Hence, the proposed modification would also need no additional approval from Reserve Bank of India.
If the impugned order is allowed to sustain then the scheme will have to be remodified to reflect such justification which will result into another round of lengthy compliances all of which would have to be undertaken for the third time.
The Impugned Order is liable to be set aside and the Appeal with the prayers stands allowed.
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2024 (11) TMI 1007
Contravention of the provisions of Section 4 of the Competition Act, 2002 - abuse of dominant position - IREL is an ‘enterprise’ in terms of provisions of the Act or not - ‘relevant market’ in the present case - IREL holds a dominant position in the relevant market.
Whether OP is an ‘enterprise’ as defined in Section 2(h) of the Act? - HELD THAT:- The Commission observes that IREL, the erstwhile Indian Rare Earths Limited is a Public Sector Undertaking and an unlisted Public Company, was incorporated on August 18,1950. It became a full-fledged Government of India Undertaking under the administrative control of Department of Atomic Energy in year 1963. It has its own Board of Directors for managing its overall affairs. Accordingly, the Commission is of the considered view that IREL is not a department of the Government. The Commission notes that Sillimanite is sold by the OP in the open market for monetary consideration. Thus, IREL does not qualify for an exemption from the provisions of Section 2(h) of the Act with respect to the activity of mining and sale of Sillimanite in India. Based on the above and nature of activities carried on by OP, the Commission finds no reason to deviate from its prima facie order dated 03.01.2022 where it held OP to be an enterprise under the Act. Accordingly, the Commission finds OP to be an enterprise under extant provision of Section 2(h) of the Act.
What is the ‘relevant market’ in the present case as defined in Section 2 (r) of the Act? - HELD THAT:- With regard to delineation of relevant geographic market, the Commission notes the submission of DG that there are no geographical barriers for production as well as sale of Sillimanite in India. OP has stated that the relevant geographic market in the matter is India including import. The Commission, while agreeing with this contention of the OP, notes that the import of Sillimanite, if any, in Indian market may be appropriately considered under the relevant product market. However, there would be no change in geographic market as competition concerns (even accounting for imported relevant product) would still be evaluated within the boundary of India. Accordingly, the Commission finds no reason to disagree with the finding of DG and accepts the relevant geographic market in the instant case as ‘India’ - the Commission holds that the relevant market in the present case as “mining and supply of Beach Sand Sillimanite in India”.
Whether OP holds a dominant position within the scope of Section 4 of the Act? - HELD THAT:- The contention of the OP that the market share of an entity cannot be a definitive and exclusive indicator of its dominance and therefore, the findings of DG with respect to dominance of the OP cannot be relied upon. However, the Commission observes that the DG has analysed dominance based on various factors, as provided under Section 19(4) of the Act, and not alone on the basis of market share. Further, market share of an entity can be a strong indicator of its presence in the market and simply cannot be brushed aside in toto in absence of other negating factors - the Commission is in agreement with the conclusion drawn by the DG that the OP enjoyed a dominant position in the defined relevant market.
Whether OP has violated the provisions of section 4(2)(a)(ii) by charging unfair/ excessive prices from the consumers? - HELD THAT:- The price charged by KMML was much higher than IREL despite KMML being a much small player. The Commission also notes that allegation have been levelled in respect of higher quantities being offloaded to a particular company and its associates and also that the price charged is substantially lower vis-à-vis what is being charged from other customers. There seems to be no economic incentives for the OP, being in a dominant position, to indulge in such activities where it sold higher quantities at lower prices. Further, the Commission is of the view that market price is best left to the dynamic interaction between forces of the market and intervention would normally be required only in appropriate cases based on facts and circumstances of such a case - there is no reason for the Commission to hold that OP has indulged in excessive pricing. Resultantly, no case of contravention of Section 4(2)(a)(ii) of the Act is made out against the OP.
Whether the OP violated the provisions of section 4(2)(a)(ii) by charging discriminatory prices? - Whether the OP violated the provisions of section 4 (2)(a)(i) by imposing discriminatory supply conditions? - HELD THAT:- The Commission is of the view that quantity supplied by OP to different categories of consumers of Sillimanite may be different for the reasons such as long-standing business relations, assured off-take quantity, past off-take etc. and therefore, may not be discriminatory. Here, it is trite to say that every commercial enterprise enjoys freedom to carry out trade and take appropriate business decisions. As a normal business prudence, the Commission has reasons to believe that, a party buying in bulk would get better terms (including purchase price) than a small buyer. Unless and until there are manifest contravention of the provisions of the Act, the freedom of enterprise remains sacrosanct and the Commission would not like to dictate the terms of the trade. Based on the facts of the case and analysis, the Commission is of the view that no case of contravention of Section 4(2)(a)(i) of the Act for adopting discriminatory practices in supply of Sillimanite favouring MNCs/foreign customers as against domestic customers is made out against the OP.
Considering the facts and circumstances of the case, material on records, Investigation Report of the DG, submission made by the parties and analysis carried out in preceding paragraphs, the Commission is of the view that the OP is covered under the ambit of enterprise prescribed under extant provision of Section 2(h) of the Act and is dominant in mining and sale of Beach Sand Sillimanite in India. However, no case of contravention of provisions of section 4(2)(a)(i) and 4(2)(a)(ii) of the Act is made out against the OP. Accordingly, the matter is directed to be closed.
The Commission deems it appropriate to deal with the request of the parties seeking confidentiality over certain documents/information filed by them under Regulation 35 of the Competition Commission of India (General) Regulations, 2009. The Commission notes that during the course of the proceedings, parties had filed their respective submissions in confidential as well as non-confidential version. Certain excerpts from such submissions, over which confidentiality has been sought, have been relied upon by the Commission.
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2024 (11) TMI 1006
Contravention of the provisions of Section 4(2)(c) of the Competition Act, 2002 - abuse of dominant position - HELD THAT:- In the absence of dominant position of the OPs in the delineated relevant market, the allegations of abuse made against the OPs need not be examined by the Commission.
Be that as it may, based on the information available on record, the Commission is of the view that the alleged conduct cannot be considered as an abuse of dominant position by the OPs. The Informant has not provided any evidence indicating that the OPs used the Informant’s information to develop and launch their products. Additionally, there is no evidence suggesting that the OPs prevented the Informant from introducing a similar product into the market. Furthermore, there is no record of the Informant having a similar product in development that was close to being launched and accordingly the Informant lost the first-mover advantage due to OPs’ product launch. Moreover, it is not demonstrated that having a first-mover advantage is crucial in this market.
There does not seem to be any abuse of dominant position by the OPs in the delineated relevant market - the Commission is of the considered opinion that no prima facie case of contravention of the provisions of Section 4 of the Act is made out against the OPs in the present matter. Hence, the matter is directed to be closed in terms of the provisions contained in Section 26(2) of the Act.
All pending applications stand disposed of accordingly.
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2024 (11) TMI 1005
Price fixation and bid-rigging by sugar mills and associations - price parallelism - contravention of the provisions of Section 3(3)(a) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002 - HELD THAT:- It is seen that for the allegations of price cartel amongst ISMA and the sugar mills of the State of Uttar Pradesh in contravention of the provisions of Section 3(3)(a) of the Act, the only credible evidence brought out in the investigation report is a few instances of quotation of identical prices by OP-11 and OP-19 in the Impugned Tender, and exchange of calls by them as well as by key officials of certain other OPs with Shri GK Thakur, Director of ISMA, during the tender period - It is no longer res integra that price parallelism cannot be the sole criteria to establish a cartel. Evidence of parallel pricing must be supplemented with “plus factors” showing that alleged conduct is conscious and not the result of independent business decisions. In the present matters, the plus factors on record to supplement price parallelism by 2 OPs, is exchange of a few calls between the OPs with the representative of the industry association ISMA, which may have been to understand the nuances of the Impugned Tender as it ushered a novel way of tendering process.
The investigation has not brought out sufficient evidence on record for the Commission to arrive at a finding of contravention of the provisions of the Act against any OP in the present matters - It is made clear that all information used in the present order is for the purposes of the Act and as such, in terms of Section 57 of the Act, does not qualify for grant of confidential treatment.
Thus, no case of contravention of the provisions of the Act can be made out in the present matters against any OP and the matters are directed to be closed forthwith - The Secretary is directed to forward certified copy of the present order to the Informants and the OPs, accordingly.
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2024 (11) TMI 1004
Alleged anti-competitive practices under Sections 3(4) and 4 of the Competition Act, 2002 - exclusive supply obligation - forced co-branding - refusal to deal - resale price maintenance - HELD THAT:- The Commission notes that the Informant has primarily relied upon an undated and unsigned document titled ‘Propel Agreement’ to allege ‘exclusive supply obligation’ and ‘forced co-branding’. The Commission also notes that other two allegations i.e., ‘refusal to deal’ and ‘resale price maintenance’ are stated to be imposed through oral directions. Accordingly, the Commission directed the Informant to furnish a copy of an actual agreement signed between the OP-1 and a processor. The Informant, in its response dated 07.02.2024, stated that it does not have access/ possession of a signed agreement.
Despite being given the opportunity, the Commission observes that the Informant has not been able to produce a valid and subsisting copy of the said Propel Agreement on the edifice of which the entire allegations rest - A bare perusal of the said Propel Agreement reveals that it is only an agreement to meet the requirements of the end consumers through the assistance imparted by the manufacturers to the processors by way of supply of raw materials, imparting technical and marketing training, rendering services to the customers as per the requirements, among others.
With regard to the allegation of exclusive supply obligation, the Commission observes that exclusive purchase obligation is said to be imposed on processors only in respect of ‘High Performance Glass & Allied Products’ and ‘Clear Tempered Glass’. However, no such imposition of exclusivity is observed from the submitted Propel Agreement, in respect of clear float glass/other glass, thereby implying that the processor has a choice to procure clear float glass from other glass manufacturers.
With regard to allegation of forced co-branding, the Commission has perused clause 3.3 of the said Propel Agreement which reveals that the OP-1 would facilitate the processor to use its own trademark/brand name alongside trademark/brand name of OP- 1 under certain terms and conditions. Thus, the Commission is of the view that co- branding, in itself, does not raise competition issue.
As regards allegations of refusal to deal, it has been submitted by the Informant that processors/ distributors are being offered significant discounts on products of OP-1, if they purchase exclusively from OP-1. Additionally, the processors who are dealing with competitors of OP-1 will not be sold products of OP-1. The Commission is of the view that the Informant has merely alleged the conduct to be carried out through oral directions and has not substantiated the same with any evidence. It may be noted that offering discounts on the basis of volume of purchase may not be anti-competitive, per se.
In relation to allegation of resale price maintenance (‘RPM’) being practiced through oral direction, the Informant has claimed that in certain cases, OP-1 is stated to have directly approached the large bulk customers and negotiated prices directly with them. The processors and distributors are then forced to issue invoices at such prices - the Commission notes that OP-1 would have no control over the price charged by the processors from the end consumers for the services provided by it. It is clear that the processors are free to charge the price from the end users for the value addition/ enhancement they carry out in the glass received from OP-1 and OP-1 does not control it. This nowhere shows that the price of end product is being controlled by the OP-1 as OP-1 only charges for the products it sells to the processor.
The Commission is of the view that no prima facie case is made out against OP-1 in respect of either Section 3(4) or 4 of the Act. Accordingly, the Information filed is directed to be closed forthwith under Section 26(2) of the Act.
Considering the grounds put forth by the Informant for the grant of confidential treatment, the Commission grants confidentiality to such documents/ information in terms of Regulation 35 of the General Regulations read with section 57 of the Act for a period of three years from the passing of this order. The Commission also grants confidentiality on the identity of the Informant as prayed. It is, however, made clear that nothing used in this order shall be deemed to be confidential or deemed to have been granted confidentiality as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 thereof.
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2024 (11) TMI 1003
Anti-competitive agreements under Section 3 of the Competition Act, 2002 - contravention of the provisions of Section 3(1), 3(2), 4(2)(a)(ii) and 4(2)(c) of Competition Act, 2002 - abuse of dominant position under Section 4 of the Competition Act, 2002 - unfair trade practices and imposition of excessive interest rates - HELD THAT:- The Commission perused the material available on record and information available in public domain. The Commission notes that the Informant is mainly aggrieved with the alleged unfair and discriminatory increase in the rate of interest charged by OP-1. The Informant has alleged that due to imposition of high rate of interest, frequent increase of rate of interest and not allowing pre-payment of Loans (imposition of pre-payment penalty) resulted in the creation of barriers for new entrants in the market, as consumers would be disinclined to switch to a new entrant due to the apprehension of incurring losses. It is also alleged that the competition gets adversely affected as consumers face hindrance in the form of penalties when they switch to another bank. Therefore, the conduct of OP-1 allegedly amounts to be in violation of Sections 3(1) and 3(2) of the Act. It is also alleged that imposing unjust and excessively high rates of interest contravene provisions of Section 4 of the Act.
For the purpose of analysis of conduct of OP-1 under the ambit of Section 4 of the Act, the Commission deems appropriate in the present matter to delineate relevant market as ‘provision of loan against property in India’. The Commission notes that the Informant has suggested that OP-1 has the biggest share in the area of Delhi and NCR and therefore is dominant. The Commission also notes from the information available in public domain that OP-1 is a housing finance company which is India’s third largest non-bank mortgage lender in the country and is regulated by the Reserve Bank of India (RBI) - it is observed from the information in public domain that the relevant market appears to be competitive with the presence of large number of banks and Non-Bank Financial Companies (NBFCs) and housing finance companies and thus, dominance of OP-1 is not established in the aforesaid relevant market. Further, the allegation of aftermarket abuse is misplaced since the loan services of the nature impugned herein do not involve any aftermarket as alleged by the Informant and is, thus, rejected.
The Commission is of the view that there is no prima facie case made out under the provisions of Section 4 of the Act. As far as the provisions of Section 3 of the Act is concerned, the agreement with an end-consumer like in the present case is not envisaged as an anti-competitive agreement under Section 3 of the Act and therefore, no case is made out under the provisions of Section 3 of the Act.
The Commission is of the view that prima facie there is no competition concern arising in the present matter under the provisions of Section 3 and Section 4 of the Act and therefore, the matter is directed to be closed forthwith under Section 26(2) of the Act - the Secretary is directed to communicate the decision of the Commission to the Informant, accordingly.
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