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2019 (10) TMI 1610
Liability of petitioners for unauthorized online banking transactions effected through SIM swap fraud - fraudulent transactions by the third parties to withdraw money from their accounts online - HELD THAT:- The bank cannot claim any amount from the customer when a transaction is shown to be a 'disputed transaction'. The bank can recover from the customers only when it can unequivocally prove that the customer was responsible for such transaction, independently through the civil court. The RBI guidelines is a clear mandate to exonerate a customer in such 'disputed transaction'. RBI circular presumes the innocence of the customer in such given circumstances. However, this innocence can be controverted. The onus falls on the bank to prove otherwise.
In the present case, the police investigation prima facie established that fraud has been committed. The beneficiaries hail from West Bengal. There is nothing on record to establish any connivance on the part of the petitioners. The police investigation also would reveal that the accused obtained duplicate SIM cards by using fake identity cards. It was also brought out that the beneficiaries immediately withdrew the money from their bank accounts at West Bengal. In such circumstances, the transactions can be treated as 'disputed transactions'. These transactions would fall within the sweep of zero liability as referred to in RBI Circular. The remedy of the bank in such circumstances is to approach the civil court and recover the amount from the persons who were responsible for such transactions.
The amounts have been debited from the loan account of the petitioners. The petitioners cannot be held responsible for such debit without establishing through the civil court that they are responsible for such withdrawal from the loan account. If any amount deposited by the petitioners also have been transferred, in the same manner, that shall be restored to the petitioners without any delay at any rate within two weeks from the date of receipt of a copy of this judgment. These directions are issued without prejudice to the bank to proceed against the persons who are responsible for these transactions through civil court.
Conclusion - i) Petitioners are not liable for unauthorized online banking transactions effected through SIM swap fraud. ii) Banks cannot recover amounts from customers without independent proof of negligence or complicity. iii) Mobile service providers share responsibility for fraudulent issuance of duplicate SIM cards. iv) Banks' remedy lies in civil suits against fraudsters and service providers.
Petition disposed off.
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2019 (10) TMI 1609
TP adjustment - MAM - substituting CUP Method instead of TNMM applied by the assessee - HELD THAT:- As in assessee own case [2018 (6) TMI 962 - ITAT KOLKATA] selective application of CUP Method by TPO is ad hoc, and without any cogent basis, hence the entire approach followed by the Ld. TPO in rejecting the TP study memorandum of assessee for application of TNMM method is unjustified.
As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the co-ordinate bench. Decided against revenue.
Fees for Corporate Guarantee issued to AE @ 2.225% - HELD THAT:- As in assessee own case [2019 (5) TMI 1371 - ITAT KOLKATA] we note that the provision of corporate guarantee is not an international transaction.
Appeal of the Revenue is dismissed.
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2019 (10) TMI 1608
TP Adjustment - assessee has paid interest to AEs on CCDs - AO treated it as an international transaction and made a reference to the TPO for determining the ALP u/s 92CA - TPO held the CCDs to be a loan and further proposed to levy the interest at LIBOR plus 200 basis points - HELD THAT:- We find that in the case of Adama India Pvt Ltd [2017 (1) TMI 893 - ITAT HYDERABAD] has considered the decision of Sahara Real Estate Corporation Ltd and Sahara Housing Investment Corpn. Ltd. [2012 (9) TMI 559 - SUPREME COURT] wherein the CCD has been held to be an hybrid instrument in nature of equity and cannot be thus considered as a loan particularly where the CCDs are compulsorily convertible debentures.
We also find that the Tribunal has followed the decision of Cotton Naturals (I) Ltd [2015 (3) TMI 1031 - DELHI HIGH COURT] to grant relief to the assessee. As in the assessee’s own case, the Tribunal has followed the said decision to grant relief to the assessee, and since the DRP has also relied upon its own order for the A.Y 2013-14, we are of the opinion that the issue is covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal. Further, we also find that the DRP in the last paragraph of its order has observed that the Department has filed an appeal against the order of the ITAT before the Hon'ble High Court and therefore, confirmed the order of the TPO. Thus, it is evident that the DRP wanted the issue to be kept alive and therefore, has upheld the order of the TPO.
Respectfully following the decision of the Coordinate Bench in the assessee’s own case for the A.Y 2013-14 [2018 (1) TMI 1604 - ITAT HYDERABAD] we allow the assessee’s appeal
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2019 (10) TMI 1607
Power of Tribunal to direct a party to furnish security at the interlocutory stage as an interim measure of protection under Section 17 of the Act, 1996 - Claimant has established a Prima Facie case in its favour or not - HELD THAT:- The Tribunal came to a conclusion that even in the case of claims involving monetary reliefs, the Tribunal is vested with powers to secure the claim of the party subject to the party establishing a prima facie case and the opposite party can be directed to furnish adequate security. The Tribunal observed that the paramount consideration in granting an interim relief should be that the party having its claims adjudicated should be in a position to reap the benefits of the Award by being able to execute it. Principles of Order XXXVIII Rule 5 CPC were also considered by the Tribunal and it came to a finding that power under Section 17 of the Act cannot be restricted to the powers conferred under CPC.
As is evident from the reading of the impugned order, the Tribunal perused the Bank Account statement furnished by the appellant and noticed that the appellant had transferred huge amounts to Weblink Trading Co. Ltd. and on the same day, another sum of Rs. 5 Crores was transferred to New Term Deposits. The Tribunal noted that neither the appellant denied the transactions nor explained the true nature of such transactions. It is in this background that the Tribunal was of the opinion that a restraint order was required to be passed against the appellant so that the amounts claimed by the respondent are secured.
It is thus a settled law that once the party makes out a prima facie case in its favour, the Arbitral Tribunal can grant an interim relief under Section 17 of the Act so as to ensure that the successful party is assured that the Award in its favour would be executable.
There is thus no merit in the contention of the appellant that powers of Arbitral Tribunal are very restricted and it had no powers to pass the impugned order. Tribunal in the present case has looked into the alleged claims of the respondent as well as the transactions made by the appellant, transferring Rs. 13 Crores into other accounts, coupled with its financial status. Having examined the matter in depth, the Arbitral Tribunal has passed the impugned order securing the alleged claims of the respondent. A perusal of the impugned order shows that the view taken by the Tribunal is certainly a plausible view and does not suffer from any perversity requiring interference by this Court under Section 37 of the Act. It is well settled that the Act of 1996 contemplates very little or no interference in the orders passed by the Arbitral Tribunal.
Conclusion - The view taken by the Tribunal is a plausible view and there is no perversity calling for any interference. The impugned order of the Tribunal has balanced the equities between the parties. Transferring of huge amounts on a single day prima facie does create an impression that the transfers were made with an intent to defeat the claims of the respondent. Securing the respondent was thus required so that on his succeeding in the proceedings the Award is not rendered unexecutable. There is no infirmity in the order of the Tribunal impugned herein.
Appeal dismissed.
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2019 (10) TMI 1606
Addition u/s 68 - assessee could not establish the identity, creditworthiness and genuineness of the transaction - HELD THAT:- As assessee could not furnish the confirmation of the depositor. Therefore, the assessee has failed to discharge initial onus cast upon it.
Further the order of CIT(A) also noted that assessee itself is an entity which is a penny stock company.
Merely because there is an order of the Hon'ble High Court of amalgamation, the identity, creditworthiness and genuineness of the depositors cannot established. No infirmity in the order of the lower authorities. Appeal of the assessee is dismissed.
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2019 (10) TMI 1605
Validity of promotion policy for the rank of Air Vice Marshal in the Indian Air Force, which rearranges the merit list in order of seniority - principles of "merit-cum-seniority" or "seniority-cum-merit"? - HELD THAT:- The promotion to the post of Air Vice Marshal is regulated by Circular dated February 20, 2008, therefore, the promotion can be claimed only in terms of eligibility and the norms fixed therein. Mere fact that the Appellant could not be promoted on account of non-availability of vacancies before his superannuation is not a ground on which the Promotion Policy can be struck down. The Promotion Policy can be struck down only if the policy has no reasonable nexus with the objective to be achieved and is discriminatory. The lack of vacancy is not a ground on the basis of which promotion policy can be struck down. Since the Promotion Policy is in two stages as in Rajendra Kumar Srivastava i.e. to shortlist the candidates on the basis of eligibility criteria and on the basis of the marks obtained in the Annual Confidential Report and the marks given by the Board, therefore, the applicability of principle of seniority cannot be said to be arbitrary or irrational which may make the policy illegal and unsustainable.
Conclusion - i) No employee has a right to get promotion but only a right to be considered for promotion. ii) The policy provides equal opportunities to the officers falling within the zone of consideration and subsequent promotion.
The policy circulated on February 20, 2008 do not suffer from any illegality which was rightly not interfered with by the learned Tribunal. Thus, the appeal is dismissed.
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2019 (10) TMI 1604
Maintainability of appeal on low tax effect - Unaccounted payment to different parties - HELD THAT:- Tax effect in this appeal is below Rs. 50,00,000./-. Vide recent CBDT Circular No. 17/2019 dated 08.08.2019 read with earlier CBDT Circular No. 3 of 2018, dated 11.07.2018, minimum threshold limit of tax effect of filing of appeals by Revenue in Income Tax Appellate Tribunal ("ITAT") has been enhanced to Rs. 50,00,000/-.
In a subsequent clarification issued by CBDT vide F.No. 279/Misc/M93/2018-ITJ, dated 20/08/2019, it has been clarified by CBDT that the aforesaid revised monetary limit is also applicable to all pending appeals in ITAT. Therefore, in view of the foregoing, we are of the view that this appeal filed by Revenue is not maintainable.
Before leaving, we clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal U/s 254(2) of Income Tax Act, 1961 seeking recall of this order and, for restoration of the appeal if it is found that this appeal of Revenue is not covered by aforesaid CBDT Circulars dated 08.08.2019 and 11.07.2018.
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2019 (10) TMI 1603
Applicability of provisions of Section 125-A of the Representation of the People Act, 1951 - alleged failure of the respondent to disclose pending criminal cases in the affidavit filed with nomination papers - "information" under Section 33-A of the 1951 Act - HELD THAT:- A bare perusal of Form-26 makes it abundantly clear that, for offences punishable with imprisonment for two years or more, while entry (5) (i) mandates disclosure of information by the contesting candidate regarding the case(s) that is/are pending against him in which charges have been framed by the Court; entry (5)(ii) mandates disclosure of information by the contesting candidate regarding cases that are pending against him in which cognizance has been taken by the Court.
Entry 5(ii) specifically mentions that the candidate is required to provide information of the case(s) pending in which cognizance has been taken. This is in addition to the information he is required to provide against the column in Entry 5(i) as the words 'Other than the cases mentioned in item (i) above' are specifically used in Entry 5 (ii).
The position is made further clear by the letters written by the Election Commission of India to the Chief Electoral Officer of all the States and the Union Territories. A reading of the said letters would go to show that a contesting candidate is mandated to furnish information concerning the cases in which a Competent Court has taken cognizance along with the cases in which charges have been framed. The said letters also make it clear that the affidavit mentioned in Section 33-A(2) of the 1951 Act is prescribed in Form-26 and that any false declaration or concealment of information in the said affidavit will attract the provisions of Section 125-A of the 1951 Act.
A cumulative reading of Section 33-A of the 1951 Act and Rule 4-A of the 1961 Rules and Form-26 along with the letters dated 24.8.2012, 26.9.2012 and 26.4.2014, make it amply clear that the information to be furnished Under Section 33-A of the 1951 Act includes not only information mentioned in Clauses (i) and (ii) of Section 33-A(1), but also information, that the candidate is required to furnish, under the Act or the Rules made thereunder and such information should be furnished in Form 26, which includes information concerning cases in which a competent Court has taken cognizance (Entry 5(ii) of Form 26). This is apart from and in addition to cases in which charges have been framed for an offence punishable with imprisonment for two years or more or cases in which conviction has been recorded and sentence of imprisonment for a period of one year or more has been imposed (Entries 5(i) and 6 of Form 26 respectively).
Conclusion - The information to be furnished under Section 33-A of the 1951 Act includes not only information mentioned in Clauses (i) and (ii) of Section 33-A(1), but also information, that the candidate is required to furnish, under the Act or the Rules made thereunder and such information should be furnished in Form-26.
The order of the High Court dated 3rd May, 2018 is set aside - appeal allowed.
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2019 (10) TMI 1602
Maintainability of petition - initiation of CIRP u/s 7 of IBC - Corporate debtor defaulted in the repayment of all the Credit facilities - existence of debt and default or not - effect of judgement of Hon’ble Supreme Court in Dharani Sugars and Chemicals Ltd. [2019 (4) TMI 230 - SUPREME COURT] - Financial Creditor refused to go ahead with the restructuring process despite the approval of the same due to the 12.02.2018 RBI circular.
Effect of judgement of Hon’ble Supreme Court in Dharani Sugars and Chemicals Ltd. [2019 (4) TMI 230 - SUPREME COURT] - HELD THAT:- At the outset, it is pertinent to note that the decision of Hon’ble Supreme Court in Dharani Sugars and Chemicals Ltd. [2019 (4) TMI 230 - SUPREME COURT] wherein the circular issued by Reserve Bank of India on 12.02.2018 regarding the revised framework for the resolution of stressed assets was set aside, and all actions against the Corporate Debtor under the I&B Code initiated only because of the operation of the impugned circular were declared non-est - It may be noted that the Hon’ble Supreme Court has held that all the cases in which debtor have been proceeded against by financial creditors under Section 7 of the I&B Code, only because of the operation of the impugned circular will be proceedings which, being faulted at the very inception, are declared to be non-est. But no bar was imposed upon the financial creditors to file a section 7 application against the defaulting financial debtor.
The reason for not executing the debt restructuring scheme as well as filing of an application under section 7 of I&B Code is the debt and default committed by the Corporate Debtor and not the RBI Circular dated 12.02.2018. Therefore, the present application filed under section 7 of I&B Code is nowhere affected by the judgment of the Hon’ble Supreme Court in Dharani Sugars and Chemicals Ltd. as it is not filed under said RBI Circular dated 12.02.2018.
Existence of debt due and payable - HELD THAT:- On perusal of the documents submitted by the applicant, it is clear that on 17.01.2019, debt amounting to ₹194,26,53,633/- is due and payable by the Corporate Debtor to the Applicant. The debt is established by the deed sanctioning the renewed limits executed on 28.09.2015 - The Applicant Bank sent a loan recall notice, dated 10.09.2018, to the Corporate Debtor recalling an outstanding amount of ₹160,68,00,839.10 as on 31.08.2018. The CIBIL Report of Corporate Debtor dated 07.01.2019 also reflects an amount of ₹94,46,61,982/- against working capital and term loan facilities being classified as Doubtful. Further, debt and default are admitted by the Corporate Debtor in its affidavit in reply. Therefore, the debt and default of more than Rupees One Lac are established - The application filed by the financial creditor is on proper Form 1, as prescribed under the Adjudicating Authority Rules and application is complete.
Conclusion - HELD THAT:- The Application under sub-section (2) of Section 7 of I&B Code, 2016 filed by the financial creditor for initiation of CIRP in prescribed Form 1, as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is complete. The existing financial debt of more than Rupees One Lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted.
Petition admitted.
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2019 (10) TMI 1601
Maintainability of suit - commercial dispute within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015 - whether the transaction between the parties herein which is the subject matter of the suit could be considered as a “commercial dispute” so as to enable the Commercial Court to entertain the suit? - HELD THAT:- Commercial Divisions are to be set up in High Courts that are already having ordinary original civil jurisdiction having one or more Benches consisting of a Single Judge having experience in dealing with commercial disputes for exercising powers under the Act. As per Section 7(1) and the proviso thereto, Commercial Division will hear and dispose of all suits and applications relating to commercial disputes of a specified value, that lie in a court not inferior to district court and filed in a High Court having ordinary original civil jurisdiction and also those cases transferred to High Court under Section 22(4) of the Designs Act, 2000 or under Section 104 of the Patents Act, 1970.
The object and purpose of Commercial Courts Act is to ensure that the Commercial Courts, Commercial Appellate Courts, Commercial Division and Commercial Appellate Division of the High Courts and also to ensure that the commercial cases are disposed of expeditiously, fairly and at reasonable cost to the litigant - Section 13 deals with appeals from decrees of Commercial Courts and Commercial Divisions. As per Section 14 of the Act, the Commercial Appellate Court and the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within a period of six months from the date of filing of such appeal.
Conclusion - For a dispute to qualify as a "commercial dispute" under the Commercial Courts Act, the immovable property must be "actually used" in trade or commerce.
Application disposed off.
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2019 (10) TMI 1600
Addition u/s 14A r.w.r. 8D - Addition against the dividend income which was claimed as exempt income under the provisions of the Income Tax Act - HELD THAT:- As decided in Joint Investment P. Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] disallowance if any, under section 14A of the Act is to be restricted to the amount to tax free income. Following the said ratio we direct AO to restrict the disallowance u/s 14A of the Act to Rs. 2,61,000/-. Thus, Ground No. 1 raised by the assessee is partly allowed.
Nature of expenses - disallowance holding the expenditure to be capital in nature - HELD THAT:- As expenditure incurred by the assessee for smooth running of its business is to be allowed as revenue expenditure. Further, by incurring the expenditure, no new asset had come into existence and hence, there is no merit in making the aforesaid disallowance in the hands of the assessee except the expenditure. Accordingly, we allow the expenditure as revenue expenditure in the hands of the assessee and direct the AO to capitalize the expenditure and allow depreciation on the same.
Disallowance of travelling expenditure holding the expenditure to be personal in nature - HELD THAT:- In the hands of the assessee, the expenditure has been incurred by the assessee on the travelling of the Directors and other employees of the assessee for foreign travel to Ghana, South Africa. The said expenditure is on air tickets and purchase of dollars. The assessee is a limited concern and there is no merit in the orders of the authorities below in making the aforesaid disallowance on account of personal nature. Allow the claim of the assessee in entirety.
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2019 (10) TMI 1599
Contravention of the provisions of Section 4 of the Competition Act, 2002 - rejection of report submitted by the Director General, Competition of Commission of India - no opportunity was granted to the petitioner to contest the premise on which CCI rejected the DG’s report - violation of principles of natural justice.
Whether it was incumbent upon CCI to pass an order directing further inquiry under Section 26(8) of the Act in the event it did not agree with the report submitted by the DG? HELD THAT:- The contention that if the DG’s report recommends that there are contraventions of the Act, CCI cannot close the case straightway, is without any merit. There is no provision in the Act which mandates that CCI must accept the DG’s report recommending that there are contraventions of the provisions of the Act. The DG’s report is not binding on CCI and it can differ with the DG’s findings and reject the same. If on examination of the DG’s investigation report indicating contraventions of the Act and CCI finds that there are no such contraventions; it is required to close the case, as has been done in the present case - If the petitioner’s contention that it is mandatory for CCI to direct further investigation in the event it disagrees with the DG’s recommendation is accepted, it would imply that CCI can never disagree with the report submitted by the DG. This, clearly, is not the scheme of Sections 26 and 27 of the Act. The report submitted by the DG under Section 26(3) of the Act is merely recommendatory. CCI is required to examine the same and take a view after hearing the concerned parties.
In the present case, CCI has not accepted the DG’s report and after hearing the parties has decided to close the case. The contention that this is contrary to the scheme of Sections 26 and 27 of the Act, is bereft of any merit and is, accordingly, rejected -
Undisputedly, the impugned order passed by CCI is final and no appeal is provided under the Act against such an order. The contention that the impugned order is an order under Section 27 of the Act was rejected by COMPAT vide its order dated 15.05.2017. The petitioner has accepted the said order and the issue whether the impugned order is appealable or not, does not arise for any further consideration.
Whether the impugned order suffers from any infirmity, which warrants interference by this Court under Article 226 of the Constitution of India? - HELD THAT:- In the present case, CCI had noticed that the parties had exchanged drafts of the GSPA before finalising the same. More importantly, some of the clauses which the petitioner claimed were unfair and discriminatory, had not been objected to by SRMB during contractual negotiations. Clearly, in these circumstances, the decision of CCI to take into account that the GSPA was a negotiated contract, cannot be faulted.
This Court finds that the entire approach of the DG in expressing its subjective opinion on various clauses is flawed. The DG is required to submit an investigation report after investigating facts and making recommendations on the basis of a factual foundation. In the present case, the DG has considered various clauses of the GSPA and has expressed its subjective opinion regarding the same. This, clearly, is not the only scope of investigation as contemplated under Section 26(3) of the Act.
It was contended on behalf of the petitioner that CCI ought to have remanded the matter back to the DG for further inquiry instead of relying on the submissions made on behalf of SRMB. This contention is unmerited, as most of the recommendations made by the DG with regard to various specific clauses of GSPA were based on its subjective opinion and therefore, there was no necessity for remanding the matter back for further inquiry. CCI was well within its jurisdiction to examine the DG’s subjective opinion and take an informed view after considering the submissions made by the concerned parties.
This Court finds the present petition unmerited. This Court is also of the view that the proceedings instituting by the petitioner are an abuse of the process of law. The petitioner is an employee of SRMB and SRMB had issued no authority in favour of the petitioner to espouse its cause - Petition dismissed.
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2019 (10) TMI 1598
TP Adjustment - exclusion of Infosys BPO Ltd from the comparable list - HELD THAT:- Assessee had made out a clear case in its favour and hence, the AO / TPO is directed to exclude M/s. Infosys BPO Limited as comparable company while computing the ALP for the ITeS Services.
Segmental margins to be considered for Microland Ltd., we find merit in the assessee’s above submission. Therefore, we deem it appropriate to restore this to the AO/TPO for considering the ITEs segmentals alone afresh and rework the adjustments in accordance with law after due opportunity of being heard to the assessee.
Inclusion of comparable companies M/s. Informed Technologies India Ltd. - We find merit in the contention of ld. AR that entire export revenue of this company is earned from BPO services alone. Hence, rental income cannot be treated as part of operational income. Further, there is also substance in the submissions of ld. AR that the company satisfies more than 25% revenue earned from export filter applied by TPO. As neither TPO nor DRP have examined the aforesaid aspects while rejecting the aforesaid company as comparable, we think it appropriate to restore the issue of comparability of this company to AO/TPO for considering afresh.
Working capital adjustment - We are of the considered opinion that the capital employed on the assessee, including working capital, is one of the relevant factors for the purpose of determining the arm’s length price. Therefore, the capital employed by the assessee, including the working capital, and that of comparable companies needs to be taken into consideration. Without comparing the working capital employed by the comparable companies and that of the assessee, this Tribunal is of the considered opinion that there cannot be any transfer pricing adjustment. Therefore, we restore this issue to the AO/TPO for considering it afresh after due opportunity of being heard to assessee.
Disallowance of claim U/s. 80JJAA - assessee is engaged in export documentation services, e-commerce and data management services, web-based support services and software services wherein the raw data received are converted into a distinct processed data. Section 80JJAA is applicable to an industrial undertaking engaged in the manufacture or production of article or thing. The term ‘production’ is a wider than the term ‘manufacture’ as held by the Supreme Court in the case of CIT v Sesa Goa Ltd [2004 (11) TMI 14 - SUPREME COURT] and CIT v N.C. Budharaja & Co [1993 (9) TMI 6 - SUPREME COURT] AR also submitted that this issue is pending before the ld. CIT (A) for his decision in the earlier year - HELD THAT:- Since, this issue is pending before the ld.CIT(A) for his decision in the earlier year, we deem it fit to remit this issue back to the AO to decide the issue in accordance with the decision of the ld.CIT(A).
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2019 (10) TMI 1597
Cenvat credit - services used in the course of manufacture of their goods by the job workers and the service was received at the job worker’s place - HELD THAT:- The very same issue has been considered by this Tribunal in the case of KKALPANA INDUSTRIES (INDIA) LTD., SHRI VISHAL RANKA, SHRI AJIJUL RAHAMAT KHAN VERSUS C.C.E. & S.T., SILVASA [2019 (7) TMI 2044 - CESTAT AHMEDABAD] wherein, by interpreting Rule 3 of Cenvat Credit Rules, it was held that input service used for job work, the Cenvat credit thereof is admissible to the principal.
In view of the above, the issue is squarely covered - Therefore, the impugned order is set-aside - Appeals are allowed.
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2019 (10) TMI 1596
Initiation of the disciplinary proceedings against the applicant as regards the discharge of her functions in quasi judicial capacity - allegations contained in the charge memo prima facie justify the proposed action or not - HELD THAT:- There is no prohibition as such against the initiation of disciplinary proceedings against an officer in relation to discharge of quasi judicial functions, but it must be with utmost care and caution. The mere existence of a view different from the one taken by the officer in the course of adjudication, by itself, cannot be treated as an act of misconduct. There must exist adequate material, even at the stage of issuance of charge memo, which discloses the existence of ulterior motive, or dishonest intention on the part of the officer in deciding the matter in a particular way. Therefore, the first issue answered to the effect that the disciplinary authority in this case does have the power to initiate the disciplinary proceedings in relation to the discharge of quasi judicial functions by the applicant also, subject to the rider that there must exist adequate material, even at the stage of issuance of charge memo, to disclose that the power has been misused for wrongful gains.
The Hon’ble Supreme Court, through a catena of judgments held that if the disciplinary proceedings pertain to the manner in which an officer has discharged his quasi judicial functions, the mere information is not adequate, and suspicion alone cannot constitute the basis - In the instant case, there is not even an allegation that the applicant resorted to any acts of dishonesty or wrongful gain. The whole edifice of the charge memo is built on the foundation of the so called hasty disposal of the appeal. Rest of the allegations are supplemental thereto.
A perusal of the record, on the two principal and important aspects mentioned above, clearly demonstrates that the entire exercise does not accord with the law laid down by the Hon’ble Supreme Court. The charge memo was based solely upon the imagination. It is fairly well known that if a person vested with the power to alter the legal status of another, permits his imagination to work, it may take him to a level, which he may not have imagined at all. The executive powers are required to be exercised on the basis of objective and verifiable material, and not on the basis of surmises, presumptions and imaginations.
The impugned charge memorandum is set aside - appeal allowed.
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2019 (10) TMI 1595
Seeking waiver of the pre-deposit in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - rejection of application on the ground that Section 18(2) of the SARFAESI Act makes no distinction between an appeal filed against an interim order of the Debt Recovery Tribunal (DRT) and a final order - HELD THAT:- The question before the DRAT therefore was whether it should entertain the Petitioner’s application for waiver of the pre-deposit. The view taken by the DRAT that there could be no waiver of pre-deposit in terms of Section 18 of the SARFAESI Act appears to be incorrect in view of the decision of the Division Bench of this Court in Manju Devi and Ors. v M/s. R. B. L. Bank Ltd. and Ors. [2017 (4) TMI 476 - DELHI HIGH COURT]. This Court in the said decision noted that the second proviso to Section 18(1) of the SARFAESI Act obligates the borrower to deposit with the DRAT 50% of the amount of debt due from him for the appeal, which may be filed either by the borrower or other party, to be entertained. The Court noted that if the said proviso had to be read literally to mean that such appeal would not be entertained, if neither the borrower nor the third person made the deposit then “appeals by third persons would in effect and substance, be rendered nugatory for a third person, who would never be able to get his appeal entertained.” On the facts of that case, which are similar to the facts in the present case, the petitioners therein were neither the borrowers nor the mortgagers or guarantors in respect of the loan facility availed by the principal borrower.
In view of the legal position explained in Manju Devi this Court holds that the DRAT was in error in the present case in declining to entertain the prayer of the Petitioner for waiver of pre-deposit. It is the Petitioner’s case that he is neither the principal borrower nor mortgager of the property in question and that issue has to await the consideration of the SA filed by him on the strength of the CFSL final report which is yet awaited. It may be noticed here that it is only an interim report of the CFSL that has been submitted before the DRT.
The impugned order dated 8th February, 2018 passed by the DRT-I dismissing the Petitioner’s application for condonation of delay is hereby set aside. The DRT-I is directed to take on record the affidavit of evidence and rejoinder filed by the Petitioner - Appeal disposed off.
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2019 (10) TMI 1594
Seeking grant of bail - commercial quantity of cannabis was seized from the possession of the applicant - reasons to believe - offence punishable u/s 8/20 of NDPS Act, 1985 - HELD THAT:- Considering the the fact that the seized substance was moisture laden, there is reason to believe that the 'actual' cannabis was lesser in weight as 21 Kg. 400 grms shown to be seized. This fact coupled with the fact that there was no criminal antecedents makes out the case for grant of bail to the applicant.
Without expressing any opinion on merits of the case, the application for grant of bail filed on behalf of the applicant is allowed and it is directed that upon applicant's furnishing a personal bond to the tune of Rs.50,000/- with one solvent surety in the like amount to the satisfaction of the trial court, the applicant shall be released on bail, for his appearance before the concerned trial court on all the dates as may be fixed in this behalf by the said court, during the pendency of the trial.
Application allowed.
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2019 (10) TMI 1593
Taxability of income in India - Income deemed to accrue or arise in Indi - receipt of income on account of gain on foreign exchange transaction - India Spain Treaty - as per revenue Assessee being a Foreign Institutional Investor is refrained from undertaking any other business activity and accordingly the receipt on account of foreign exchange transaction will be in the nature of income from other source or other income taxable in India as per Article 23(3) of the DTAA between India and Spain - HELD THAT:- As decided in own case for the assessment year 2013-14 [2019 (10) TMI 1163 - ITAT MUMBAI] we cannot make the gains taxable under article 7 when the assessee does not have a PE in India, or under article 14 when the gains are not covered by any of the exception clauses in article 14(1) to 14(5). It is not, in a way, even the case of the AO that these gains of the assessee are taxable in India under article 7 or article 14; his case is that these gains, admittedly outside the scope of article 7 and 14, are covered by article 23 as such. The question thus remains as to what is the scope of taxation in the source jurisdiction under article 23- an aspect which has not left intact by the judicial precedents relied upon and which, in fact, is the foundational issue raised in this appeal. Our decision is based on our analysis of these aspects, and our conclusion is that, under the Indo Spanish tax treaty, the assessee does not have any tax liability in respect of the transactions in question.
Capital loss on sale of shares of companies engaged in real estate development activities classified under BSE Realty Index as exempt under Article 14(6) of the India-Spain DTAA - As decided in own case [2019 (10) TMI 1163 - ITAT MUMBAI] the assessment year 2013-14 in the present case, while the assessee has sold no more than 2% shares in any of the six realty companies,
There is no question of holding any controlling interest or even significant interest in these companies. These holdings therefore cannot give, or be even part of an effort to get, controlling right or any other right to occupy the property. It has not even be the case of the Assessing Officer that the assessee had significant holdings in these companies. That apart, it is also important to note that all these companies are engaged in the business of real estate development rather than in the business of holding real estate as investments. The business model of realty companies is focussed on gains from real estate development rather than gains from holding the immovable properties. Viewed in the context of the purpose for which article 14(4) finds place in the Indo Spanish tax treaty, and unambiguous thrust of such provisions in the tax treaty literature, article 14(4) is to be read alongwith and to supplement article 14(1), the gains on sale of such shares cannot indeed be taxed in the source state under article 14(4).
Secondly, while the expression 'principally' is not specifically defined in the Indo Spanish tax treaty, as evident from the subsequent clarifications in the model convention commentaries, and in the absence of anything to suggest there was a different intention at an earlier point of time, the threshold test can be safely applied at "fifty percent" of total assets.
What essentially follows that the sale of shares in only such companies are covered as hold, directly or indirectly, at least fifty percent of the aggregate assets consisting of immovable property. Just because a company is dealing in real estate development does not imply, or even suggest, that over fifty percent of its aggregate assets consist of immovable properties. It is not the case before us that predominant part, or fifty percent, of aggregate of assets of these companies consist of immovable properties. AO has made no efforts whatsoever to demonstrate, or even indicate, that the assets held by these companies constituted "principally" the immovable properties. AO has apparently proceeded on the presumption that just because these companies are dealing in real estate development, the assets of these companies "principally" consist of immovable properties. Such an approach cannot get any judicial approval.
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2019 (10) TMI 1592
Validity of assessment made u/s 158BC - limitation period prescribed u/s 158BE - As Decided by HC [2012 (12) TMI 164 - MADRAS HIGH COURT] as to the search completed on 13.12.2001 with drawing of the panchanama and the search party leaving the premises, the mere fact that the panchanama contain the observation that "search continues" per se would not enable the search party to keep the search in a suspended animation to carry on the search in future date to contend that the limitation has to be worked out on the last panchanama drawn ie. 15.02.2002, thus calculating the limitation from 15.02.2002. We have no hesitation in accepting the case of the assessee that the limitation ends on 31.12.2003. HELD THAT:- The Appeal is dismissed on the ground of low tax effect.
The question of law is left open.
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2019 (10) TMI 1591
Interception of telephone calls - destruction of intercepted messages - ultra vires of Section 5(2) of the Indian Telegraph Act, 1885 - non-compliance of Rules made thereunder, and for being in violation of the fundamental rights guaranteed under Part-III of the Constitution of India - Applicability of legal maxim "sublato fundamento cadit opus" meaning ''The foundation being removed, the structure falls.''
HELD THAT:- As per Section 5(2) of the Act, an order for interception can be issued on either the occurrence of any public emergency or in the interest of the public safety. The impugned three interception orders were issued allegedly for the reason of 'public safety'. As held in PUCL [1996 (12) TMI 400 - SUPREME COURT], unless a public emergency has occurred or the interest of public safety demands, the authorities have no jurisdiction to exercise the powers under the said section. The expression "Public Safety" as held in PUCL means the state or condition of freedom from danger or risk for the people at large. When either of two conditions are not in existence, it was impermissible to take resort to telephone tapping.
he Hon'ble Supreme Court in PUCL case has observed that neither the occurrence of public emergency nor the interest of public safety are secretive conditions or situations. Either of the situations would be apparent to the reasonable person.
In peculiar fact of the instant case, the impugned three interception orders neither have sanction of law nor issued for legitimate aim, as sought to be suggested. The impugned three interception orders could not satisfy the test of "Principles of proportionality and legitimacy" as laid down by the nine judges' constitution bench decision in K.T. Puttaswamy [2017 (8) TMI 938 - SUPREME COURT] - there are no hesitation in holding that all three impugned orders are liable to be set aside.
Whether any directions for destroying the intercepted messages are warranted in a particular case or the instant case? - HELD THAT:- There is no scope to presume that aforesaid directions are not mandatory. It is an admitted position that Rule 419(A)(17) which provides for destruction of intercepted messages also adopt the said directions. The Respondents are not permitted to continue to ignore the directions of the Hon'ble Apex Court nor can the same is ignored. Having held that the impugned interception orders have been issued in contravention of the provisions of section 5(2) of the Act, there are no option but to further direct the destruction of intercepted messages.
The findings of review committee would be either directions being in accordance with the provisions or not. If findings are in favour of the directions, i.e., if the directions conform to the requirements of provisions, no further step is contemplated. However, if the findings are that directions are not in accordance with the provisions, then Rule 419(A)(17) further provides for setting aside the directions and orders for destruction of the copies of intercepted messages or class of messages. Thus, orders for destruction are contemplated in Rule 419(A)(17) if and only if the directions so issued under rule 419(A)(1) for interception are ultra vires of section 5(2). Significantly, the destruction of record (i.e., copies of the intercepted messages and or class of messages) is mandatorily coupled with setting aside the directions for interceptions.
The three interception orders dated 29th October, 2009, 18th December, 2009 and 24th February, 2010 set aside - the destruction of copies of intercepted messages/recordings directed.
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