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2023 (10) TMI 1519
Disallowance u/s 36(1)(va) - late deposit of employees contribution towards PF/ESI under the head income from business - HELD THAT:- As decided in Checkmate Services [2022 (10) TMI 617 - SUPREME COURT] categorically held that the Employees Contribution deposited after respective due date mentioned in the PF Act cannot be allowed as deduction u/s 36(1)(va) of the Act.
Actual ‘due date prescribed’ - It is the case of the Assessees that the salary/remuneration payment to staff for the month was paid in subsequent months preferably in the first week of the next month. For example, the salary for the month of September, 2023 will be paid in the first week of October, 2023, thus, the Employer is required to deposit the PF/ESI Contribution within 15 days of the close of every month. As per the assessee, the due date has to be calculated within 15 days from the close of the month in which ‘payment is made to the employee’. But according to the Revenue, the Contribution has to be deposited within 15 days from the close of the month for which salary/wages of the employee is due.
As decided in Master Polishers [2023 (4) TMI 1224 - ITAT MUMBAI] deduction us 36(1)(va) of the IT Act is admissible only of the amount so received from employees for PF/ESIC is credited in specified account within the due date as per the relevant Statute. In the instant appeal, it is an admitted position of the appellant that there was delay in crediting the contribution so collected in the specified account within the due date as per the relevant Statute.
Considering the above facts and circumstances and also the decision of Master Polishers (supra), we restore the issue to the file of the A.O. to decide the same afresh keeping in view the directions of case supra along with the Tax Audit Report filed by the Assessee and the return of income filed u/s 44AB of the Act.
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2023 (10) TMI 1518
Challenge to the assessment of one bill of entry - HELD THAT:- The first appellate authority had disposed off challenge only to the assessment in one of the bills of entry with the reasoning that each assessment must be challenged separately as prescribed in Customs Act, 1962. It is on record that there is only one order of assessment and it appears that the original authority had merely appended all decisions to that one order of assessment. That is clearly not in accord with the mandate of section 17(5) of Customs Act, 1962.
As per Customs (Appeals) Rules, 1982, each assessment should be challenged separately. At the same time, it is also prescribed that each form of appeal should append the assessment under challenge. In the absence of separate assessment for each import, it was not possible to comply with the requirement therein. It was incumbent upon the first appellate authority to ensure that the original authority comply with the law to enable proper challenge. This, he had failed in doing.
The impugned order could have remanded all the appeals for compliance with the mandate of law. As only the lone order of assessment was found to merit remand, there was no reason not to remand back the others also - Appeal allowed by way of remand.
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2023 (10) TMI 1517
100% Export Oriented Unit (EOU) - benefit of exemption notifications for the clearance of Linear Alkyl Benzene Sulphuric Acid and clearance of Spent Sulphuric Acid to fertilizer companies - N/N. 2/2008-CE dated 01.03.2008 and N/N. 4/2006-CE dated 01.03.2006 - HELD THAT:- The said issue has been decided by this Tribunal in their own case M/S A.R. STANCHEM PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA III [2023 (10) TMI 1297 - CESTAT KOLKATA], wherein this Tribunal has observed that the appellant is entitled to the benefits of Notification No.2/2008-CE and Notification No.04/2006-CE.
Conclusion - The appellant has correctly paid their duty liability and is entitled to the exemptions under Notification No. 2/2008-CE and Notification No. 4/2006-CE.
Appeal allowed.
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2023 (10) TMI 1516
Evasion of Customs Duty - entering into sham agreements with a view to split the consideration for supply of imported equipments under FOB Agreement into designs & drawings and other post importation activities so as to evade customs duty - EPCG Licenses do not carry the ‘H Blast’ as the location - Spares have been imported under EPCG which are required only subsequent to the installation of the capital goods - Extended period of limitation - confiscation - penalties.
EPCG Licenses do not carry the ‘H Blast’ as the location - HELD THAT:- It is observed from the documentary evidence placed before us, the appellants have sought necessary amendment for the EPCG License to include the name of ‘H Blast’ therein. These requests were entertained by the DGFT and on examination of the amendment letters issued by them, it clear this issue has been properly addressed by the appellant. Therefore, the confirmed demand on this account does not survive and the same is set aside.
In respect of the spares imported by them under EPCG, the imported assemblies, sub-assemblies, components, sub-components are held as allowed as spares under the Foreign Trade Policy. Apart from this, Paragraph 6 of 5.1 of FTP, which defines the capital goods to include spares, meaning that the spares can be imported for pre-production purposes also. In order to obtain the Discharge Certificate for the EPCG License issued by the DGFT, the appellants have provided the details of spares imported by them and DGFT is satisfied with the imports made. Therefore, when the FTP allows such imports under the EPCG, the Customs Dept. cannot question the same and in fact have no authority to do so.
Thus, the confirmed demand on this account is required to be set aside.
Contract divided into several sham contracts - HELD THAT:- It is clear that right from the beginning, even at the stage of pre-first Offer dated 15.01.2003, the clear demarcation of service, purchase, scope of work was available at all stages. This was the case with all the other intervening Offer letters till the Final Offer dated 29.7.2005. Thus, it shows that proper planning was made for this project clearly demarcating the import of goods, purchase of indigenous goods, involvement of service works etc. The Final Six Agreements dated 1.8.2005 are the result of the detailed discussions and planning undertaken during the period 15.1.2003 till 1.8.2005.
The Revenue has built the present case purely on presumptions and assumptions basis, without actually verifying the documentary evidence placed before them. The Adjudicating authority has failed to appreciate these documentary evidence and has confirmed the demand by simply relying the assumptions made during the issue of the SCN. Hence, the confirmed demand of Rs. 32,76,67,821 is legally not sustainable.
Extended period of limitation - demand being issued for the period which is beyond even the extended period of five years - HELD THAT:- In the present case, the appellants have placed all the documents before the Appraising Officer and the goods have been cleared in the normal course. There is nothing to suggest from the present proceedings that the goods were provisionally assessed. Further, as all the transactions have been carried out with clear records for all the pre-offers and subsequent Four Offers in a transparent manner, we do not see any suppression coming out in the entire transaction. At the most, it would amount a proper taxplanning, keeping in view the best interest of the appellant company. Nothing with any substance has been brought on record that the appellant has indulged in any suppression, so as to invoke the extended period demand. Hence, the confirmed demand for the extended period is legally not sustainable on account of limitation also. Hence, the Appeal is allowed even on account of Limitation.
Confiscation - penalties - HELD THAT:- The confirmed demands do not sustain both on merits as well as on account of limitation against the main appellant TISCO. Hence, the confiscation ordered and penalties imposed on them also do not survive.
Conclusion - i) The confirmed demands against TISCO do not survive both on account of merit as well as on account of limitation. ii) The confiscation order stands set aside. iii) The penalties imposed against TISCO and all the other appellants stands set aside.
The impugned order set aside - appeal allowed.
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2023 (10) TMI 1515
Violation of principles of natural justice - denial of fair opportunity of personal hearing before the Assessing Authority, as required under Section 75(4) of the U.P. GST Act, 2017 - validity of adverse assessment order - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for "opportunity of personal hearing" and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence.
Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, it is noted, the impugned order itself has been passed on 26.12.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.
Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.
The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-1, Raebareli to issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed by way of remand.
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2023 (10) TMI 1514
TP adjustment - corporate guarantee - appropriate rate for the transfer pricing adjustment - HELD THAT:- We noted that this issue is squarely covered by the decision of Everest Kento Cylinder Ltd [2015 (5) TMI 395 - BOMBAY HIGH COURT] wherein the value of transaction is to be assessed at the rate of 0.5% and not 1% as assessed by the TPO in the present case.
Since the issue is covered, we direct the AO to adopt the guarantee commission as international transaction and assess the value at 0.5% as against 1%. This issue of Revenue’s appeal is partly allowed.
Additional depreciation which is reminder of the depreciation from earlier year, for which the assessee has claimed balance eligible depreciation - HELD THAT:- We noted that the Hon’ble High Court of Madras in assessee’s own case for assessment year 2004-05 has held that the additional depreciation is allowable for the reminder period i.e., remaining depreciation which is claimed for the asset which has been put to use for less than 180 days in the previous year. We find no infirmity in the order of CIT(A) and hence, this issue of Revenue’s appeal is dismissed. Therefore, the appeal of the Revenue is partly allowed.
Disallowing expenses relatable to exempt income by invoking the provisions of section 14A r.w.rule 8D - HELD THAT:- As assessee produced before us balance sheets and tried to show us that it has sufficient share capital and reserves and surplus but these are not filed before the lower authorities. Assessee has a case but these facts and figures are to be verified, whether assessee has sufficient own funds for making investment and in case, there was availability of funds, the AO will not make any disallowance in view of the decision of CIT vs. HDFC Ltd.[2014 (8) TMI 119 - BOMBAY HIGH COURT]Hence, this issue is remitted back to the file of the AO for verification.
Disallowance under Rule 8D(2)(iii) - assessee only made submission that only dividend yielding investments should be considered for disallowance under Rule 8D(2)(iii) in view of the decision of Vireet Investments Pvt. Ltd [2017 (6) TMI 1124 - ITAT DELHI]. We direct the AO to verify the above computation and considered only dividend yielding investment alone for the computation of disallowance under Rule 8D(2)(iii) of the Rules.
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2023 (10) TMI 1513
Addition on account of the valan transactions unexplained - HELD THAT:- There is substance in the argument of the assessee that dividend/interest income having earned through banking channels and reflected in the bank accounts, the primary entries reflected in the bank statement should be considered as material sufficient to determine income. It is not the case of the Revenue that the assessee had earned any dividend /interest in cash from neither her holdings nor any evidence is made available on record in support of such proposition.
Therefore in our opinion it would be reasonable to consider the dividend/interest income as shown in the books of account as taxable income of the assessee. Even otherwise, the difference between the figure arrived at by the AO is not much higher and as per the principle enshrined in Article 265 of the Constitution of India that State should not enrich itself unjustly, we are inclined to accept the plea of the assessee that addition in respect of dividend/interest income should be restricted.
Addition on account of share market trading profit - HELD THAT:- AO has consistently framed the assessment for A.Y. 1993-94 in case of the assessee and other related entities in the like manner as that of A.Y. 1992-93. Similarly, even the AO has not produced before us the material relied upon by him in order to substantiate the correctness of his working and disprove the figures of the assessee after lapse of 30 years. In our opinion, different approach cannot be adopted when there is no change in facts and circumstances of the case.
The facts being similar, there being no material adduced before us to distinguish the circumstances and to follow the judicial discipline, we are respectfully following the order in [2019 (2) TMI 1198 - ITAT MUMBAI] and in all fairness, equity direct the A.O. to allow 50% relief in respect of addition. The addition to the extent of Rs. 2, 88, 36,552/- is sustained and the balance addition of Rs. 2, 88, 36,552/- is deleted. In result, the ground no. 2 is partly allowed.
Addition on account of alleged share market oversold position - HELD THAT:- Tribunal has accepted the contention of the assessee that the addition on account of share market oversold position is not sustainable in law since the relevant material relied upon by the AO for computing the additions has never been brought on record till date and therefore, the addition made by the AO cannot be sustained. Addition made by the AO does not deserve to be sustained in the facts and circumstances of the case and hence, delete the same. In the result, ground filed by the assessee is allowed.
Addition on account of profit on sale of shares in shortage - AO has assessed the income of the assessee for A.Y. 1993-94 in the like manner and the DR has not pointed out any distinguishable facts in the appeal under consideration. Therefore, respectfully following the order [2019 (2) TMI 1198 - ITAT MUMBAI] passed by the co-ordinate bench and materiality of the addition, we also delete the addition of Rs. 2, 89,250/- confirmed by the Ld. CIT (A). In the result, ground no. 4 of the assessee is allowed.
Income from Badla transactions - AO has followed similar process of determining Badla Income as was done in earlier year and the annexure number remains same for both years - DR has not dwell upon any distinguishing feature. Considering the materiality of the addition by respectfully following the order passed by the Tribunal in earlier year in assessee’s own case we delete the impugned addition. In the result, ground raised by the assessee is allowed.
Disallowing the interest expenditure claimed by the assessee u/s. 57 - HELD THAT:- It is apparent that the reasons given for not allowing the interest expenditure claimed by the assessee u/s. 57 of the Act are not tenable in view of the decision of Seth R. Dalmia [1977 (9) TMI 1 - SUPREME COURT] which is duly followed in the case of Smt. Pratima Mehta [2023 (10) TMI 1474 - ITAT MUMBAI] We allow this ground of appeal in favour of the assessee and direct the A.O. to allow interest expenditure claimed by the assessee while computing the taxable income.
Enhancement made by the CIT (A) on account of difference noticed in the ledger accounts - It is undisputed that the assessee carried on transactions on behalf of her client. But the contention of the assessee that it had not claimed deduction for interest payable to Harshad S. Mehta in her P & L account placed at page 800 of the paper book seems to be prima facie correct. The appellate proceedings in the case of Harshad S. Mehta are pending before the Ld. CIT (A) and if it is established that Harshad S. Mehta has offered this income for A.Y.1993-94 the same needs to be deleted from the total income of the assessee. This relief to the assessee is subject to addition in the hands of Harshad S. Mehta. In the result, ground no. 8 raised by the assessee is allowed for statistical purposes.
Levy of interest u/s. 234A and 234B - In our opinion, the A.O. is duty bound to levy interest u/s. 234A and 234B of the Act as per the provisions of the Act. We accordingly direct the A.O. to levy interest as per the law. This ground of the assessee has no merit and stands dismissed.
Assessee has not furnished source of acquisition of shares -main objection of the Revenue is that the assessee should not be granted relief as she had not furnished source of the investment - HELD THAT:- As such, it is obvious that the assessee has carried out transactions on the floors of the exchange. We find that the facts and figures brought on record by the assessee before the appellate authority have to be disproved by Revenue by bringing any cogent material or evidence to the contrary. ITAT being final fact finding authority is more concerned about the facts to be established on record based on which a fair adjudication can be carried out. It is undisputed that the CIT (A) has granted relief to the assessee on factual basis. In our opinion, the impugned order passed by the Ld. CIT(A) on this issue granting relief to the assessee is judicious and needs no interference. Hence, the first ground of appeal filed by the Revenue is dismissed.
Stock in trade and allow interest expenditure on proportional basis which was claimed by the assessee - HELD THAT:- It is the case of the Revenue that the directions are issued without considering fact that the assessee failed to show that the respective entities had charged interest on amounts paid by the respective parties. Ground no. 3 pertains to objection raised by the Revenue that the assessee had claimed deduction u/s. 57 of the Act hence; it is for the assessee to prove that the interest expenditure was incurred wholly and exclusively for the purpose of earning interest income.
Thus, it is apparent that the allowability of interest has been covered by cross appeal filed by the assessee in the ground discussed at length hereinabove. This issue has been decided in favour of the assessee. Having held that the assessee is entitled to claim deduction for interest expenditure, these grounds filed by the Revenue become infructuous and hence, ground nos. 2 & 3 are dismissed.
Non granting of set off of loss against other income - As it is apparent that the A.O. has not adduced any material to show that the transactions captured are speculative in nature. It is apparent that the entire working or the basis of working is arbitrary. Similarly, the Tribunal in assessee’s own case for A.Y. 1992-93 has upheld the view taken by the predecessor first appellate authority. No decision to the contrary has been brought to our attention by the Revenue.
Direction given by the Ld. CIT (A) to the A.O. to verify and grant relief on account of oversold position in capital market - It is apparent that the issue related to over-sold position in the capital market has also been raised in ground no. 3 of appeal filed by the assessee and the said issue has been decided in favour of the assessee for the reasons discussed hereinabove. As such, this ground filed by the Revenue has become infructuous and hence, dismissed.
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2023 (10) TMI 1512
Classification of Roasted Areca/Betel Nuts (whole or cut) intended to be imported - to be classified under Chapter 8, which covers "edible fruits and nuts," or under Chapter 20, which covers "preparations of vegetables, fruit, nuts or other parts of plants? - HELD THAT:-The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It does not specifically include the process of roasting. Here it is important to understand the difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry roasting, oil-roasting and fat- roasting referred in chapter 20. The terms dry-roasting, oil roasting and fat-roasting however are not defined in the Customs Tariff Act, 1975.
Chapter 20 of the Tariff covers the Preparations of vegetables, fruit, nuts or other parts of plants. As per Chapter Note 1 (a) to Chapter 20, the Chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in Chapters 7, 8 or 11. Therefore, vegetable, fruit or nut products or preparations made other than by the processes specified in Chapters 7, 8 or 11 are classifiable in Chapter 20. The processes specified in Chapters 7, 8 or 11 mainly include freezing, steaming, boiling, drying, provisionally preserving and milling. Therefore, any vegetable, fruit, nut or edible parts of a plant which is prepared or preserved by any other process than these are liable to be classified under Chapter 20.
As per HSN Explanatory Notes, heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the chapter note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter heading 0802.
The Honourable High Court of Madras in its recent judgement on 01.08.2023 [2023 (8) TMI 492 - MADRAS HIGH COURT], has upheld the classification of Roasted Betel Nuts under CTH 2008 19 20.
Conclusion - The Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 'Other roasted nuts & seeds' of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975.
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2023 (10) TMI 1511
Cancellation of registration of petiitoner - order does not show any reason or even raised an allegation against the petitioner of not having filed returns for a continuous period of six months - HELD THAT:- The order has to be interfered with. The order does not clearly indicate the failure to file the returns nor does it indicate the explanation stated in the reply said to have been filed dated 15.02.2023.
Annexure-1 order set aside especially on the undertaking made by the petitioner before Court that the entire tax, interest and penalty would be paid. If the petitioner pays the amount of tax, interest and penalty and also files the returns for the period for which the default occurred within a period of one month from today, the registration shall be restored and if not the registration shall stand cancelled.
Petition allowed.
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2023 (10) TMI 1510
Dismissal of application of the Appellants filed for the appointment of an arbitrator Under Section 11 of the Arbitration & Conciliation Act, 1996 - District Consumer Forum dismissed this application on the ground that the complainant has invoked a public law remedy before a "Judicial Authority", under a beneficial legislation for consumers, which is the Consumer Protection Act, 2019.
Whether the dispute between the parties is arbitrable, and once a party has availed the remedy before a public forum under a special beneficial legislation, can it be compelled to go for arbitration?
HELD THAT:- It is absolutely clear that the builders/owners had to hand over the fully constructed house/villa to the buyer, within three years from the date of the agreement i.e., 27.08.2013, with a six months grace period. In other words, this constructed house/villa had to be handed over to the buyer/consumer on or before February 27, 2017. This has admittedly not been done. What happened instead is that in 2020, i.e., after three years from the date when the constructed house/villa had to be handed over to the buyer, the builder sends a "Termination Notice" to the buyer and terminates the agreement, ostensibly on the ground that the buyer had not signed "the Construction Agreement".
The arbitrability of a dispute has to be examined when one of the parties seeks redressal under a welfare legislation, in spite of being a signatory to an arbitration agreement. 'The Consumer Protection Act' is definitely a piece of welfare legislation with the primary purpose of protecting the interest of a consumer. Consumer disputes are assigned by the legislature to public fora, as a measure of public policy. Therefore, by necessary implication such disputes will fall in the category of non-arbitrable disputes, and these disputes should be kept away from a private fora such as 'arbitration', unless both the parties willingly opt for arbitration over the remedy before public fora.
This Court in a series of decisions, while considering both the provisions in the Consumer Protection Act, 1986 and the Arbitration Act, 1996, has held that the Consumer Protection Act being a special and beneficial legislation, the remedies provided therein are special remedies and a consumer cannot be deprived of them should he choose to avail such a remedy, in spite of an arbitration agreement between the parties. It is a remedy provided to the consumer where the consumer finds a defect in either goods or services provided to him and therefore seeks a redressal of his grievances before the consumer forum provided to him by the legislature.
Conclusion - The Consumer Protection Act is definitely a piece of welfare legislation with the primary purpose of protecting the interest of a consumer. Consumer disputes are assigned by the legislature to public fora, as a measure of public policy.
The application Under Section 11 of the Arbitration Act, 1996 for appointment of an arbitrator, was not maintainable in the present case - appeal dismissed.
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2023 (10) TMI 1509
Exemption claimed u/sec. 10(10AA)(ii) denied - leave encashment received upon retirement - addition made contending that deduction is available to the extent of Rs. 3,00,000/- only and therefore, the amount was added - whether the exemption was limited to Rs. 3,00,000 as per the prevailing notification?
HELD THAT:- CPC and ld. CIT (A) contended that in the light of this specific notification being not issued the leave encashment allowable up to Rs. 3,00,000/- only whereas we note from the submission of the assessee that the assessee has relied upon the notification No. 31/2023/F.No. 200/3/2023-ITA-1 dated 24th May, 2023 and submitted that the revised limit of Rs. 25,00,000/- increased on account of leave salary is applicable and to be considered in the light of fact that government has issued this notification belatedly.
The assessee has already claimed the leave salary as exemption the benefit should be given to the assessee. The similar issue has been decided by the bench in the case of Ram Charan Gupta [2023 (6) TMI 1476 - ITAT JAIPUR]
Thus, we held that the assessee is entitled to get the deduction as claimed in the return of income u/s 10(10AA) of the Act as the limit has been increased from 3 lac to 25 lacs. Appeal of assessee is allowed.
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2023 (10) TMI 1508
Admission of applicant's claim as Corporate Insolvency Resolution Process (CIRP) costs - seeking to set aside e-mail communication issued by the Liquidator modifying the claim of the Applicant - seeking to restrain on distribution of proceeds of Liquidation Estate to other Stakeholders - seeking reimbursement of legal costs incurred in prosecuting this application - Levy of interest on the original outstanding as claimed by the Applicant - HELD THAT:- The Applicant has not filed any claim within the prescribed time under the Liquidation Process Regulations. However, the fact of supply of the Bunkers was within the knowledge of the Liquidator, who had contested the claim from the suppliers of the Applicant before Admiralty Court. It is not disputed that the Applicant had issued debit note levying interest on the delayed payment on 25.09.2019, and the claim was filed by the Applicant on 23.03.2019, however no interest was claimed in such claim form. Nonetheless, the Liquidator admitted the claim of Principal amount of the Applicant, after deducting therefrom the value of supplies made by Dushyant Patel and Gujarat Mariners settled before Admiralty Court.
The fact of the suit having been filed by the suppliers of the Applicant was brought to its knowledge by the Resolution Professional, and it never bothered to take note of same. Due to pendency of the suits, the concerned Ships could not have been disposed off, thus putting the realisation of the assets of the Corporate Debtor qua those ships in suspension. Since, the Resolution Professional/Liquidator is obligated to preserve the assets of the Corporate Debtor, there are no infirmity in act of the Resolution Professional/Liquidator in settling the dues of the Suppliers of the Applicant before Admiralty Court and deducting the same therefrom at the time of admission of Applicant’s belated claim.
Levy of interest on the original outstanding as claimed by the Applicant - HELD THAT:- The claim of interest was not advanced at the time of filing of the claim by the Applicant back on 23.03.2019, while the Applicant must have been conscious of the statement in the invoices, issued by it from time to time, about the levy of interest. In this back drop, the fact if the stipulation of interest was mere a statement to act as deterrent against the delayed payment or it was in actual meant to be enforced, cannot be reconciled. Accordingly, there are no merit in the claim of the Applicant for payment of the interest.
There are merit in the submission of the Resolution Professional that the present application is to circumvent the specific remedy embodied in Section 42 of the Code, in case any claimant is aggrieved by the decision of the Liquidation in respect of admission of their claim. Accordingly, this application deserve to be dismissed on that ground also because even if this application is taken as an Appeal u/s 42 of the Code, the same would be beyond the statutory period provided u/s 42 of the Code.
Conclusion - i) The Applicant's failure to file a timely claim under the Liquidation Process Regulations justified the Liquidator's actions in admitting only the principal amount after deductions. ii) The Applicant's requests to restrain distribution of proceeds and to reimburse legal costs due to procedural delays and settlements denied. iv) Applicant's interest claim dismissed, noting the lack of initial assertion and procedural delays.
Application dismissed.
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2023 (10) TMI 1507
Validity of assessment u/s 143(3) r.w.s. 144C(13) - final assessment order complied with the DRP's directions or not? - determination of the ALP for the international transactions of providing supporting services was referred to the learned TPO for determination of ALP - DRP directed AO/TPO to include Sundaram Business Services in the list of comparables and also to take into consideration the correct margins of certain companies by computing from the annual reports available in the public domain
HELD THAT:- We find from the order passed by TPO, purporting to be giving effect to the directions of the DRP, that as a matter of fact, the DRP gave such a direction and the TPO properly understood the same.
But strangely, AO missed that aspect and observed that learned DRP confirmed the action of the TPO and rejected the objections filed by the AO It is a factual mistake committed by AO
The result is that the upward adjustment proposed by TPO, so mentioned in the draft assessment order, is carried forward as it is to the final assessment order. The factual position is, therefore, clear that the final assessment order remained non-compliant with the directions of the DRP.
As in the case of M/s. ESPN Star Sports Mauritus S.N.C ET Compagnie [2016 (4) TMI 45 - DELHI HIGH COURT] and Flextronics Technologies (India) Private Limited[2018 (12) TMI 1741 - ITAT BANGALORE] held that u/s 144C(10) AO had no option, but to comply with the directions of the DRP and any order passed in disregard to such directions vitiates the entire exercise. Since such an order is without jurisdiction and null and void, the same is liable to be quashed. We hold the issue in favour of the assessee and quash the impugned order. Appeal of the assessee is allowed.
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2023 (10) TMI 1506
Exemption u/s 10(10AA)(i) - case of employees of DOT who have been w.e.f.01-10-20222 absorbed in BSNL and thus is a Government employees and is entitled for full exemption - HELD THAT:- Since the leave encashment as claimed by the assessee u/s 10(10AA)(i) of the Act which is below the limit of Rs.25.00 lacs as specified vide Notification No. 31/2023 issued by the CBDT, Ministry of Finance, New Delhi, therefore, the assessee is eligible to claim deduction of said amount and thus the AO is directed to allow the claim of the assessee u/s 10(10AA)(i) of the Act within the revised limit as prescribed in the notification . Hence, in terms of these observations, the appeal of the assessee is allowed.
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2023 (10) TMI 1505
Addition u/s 68 - bogus Long Term Capital Gain/Short Term Capital Loss - HELD THAT:- AO had added the sale consideration merely on the general statement of Shri Vipul V. Bhatt without contrary disproving these documents. Mr. Vipul V. Bhatt had retracted his statement by way of affidavit.
The assessee also submitted that they were not provided any copy of information and the statement relied upon by the assessing officer. We have also perused the balance sheet of the assessee showing that assessee was a regular investor in the shares.
As per balance sheet as on 31.03.2014 the assessee has made investment in 26 different scrips as per statement of investment which demonstrate that assessee had not made investment in only one scrip but assessee was regular investor.
Apart from the fact that assessee was a regular investor in many scrips, even for this particular scrip also it seems that this scrip was listed in stock exchange at the time of purchase as well as at the time of sale and also it continues to be listed in the stock exchange till date.
Nothing has been brought on record that SEBI or any other agency has banned the trading or any adverse finding has been given against the scrip. AO has not even conducted any enquiry from either the broker of the assessee Hornic Investment Pvt. Ltd. or from the exit provider. Simply relying upon the information from the Investigation Wing of some of the brokers who have provided accommodation entry in this scrip cannot be the sole reason of adverse inference unless AO himself carries out any enquiry or there is some other information or material on record that this scrip was banned or debarred in trading of the shares.
As perused the judicial pronouncements relied upon by the ld. Counsel and observe that on similar facts and identical issue in respect of shares of Sunrise Asian Ltd. have decided the issue in favour of the assessee.
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2023 (10) TMI 1504
Money Laundering - Seeking grant of bail - organised crime - hatching a conspiracy by impersonating as Government Officers of the highest ranks - HELD THAT:- The Apex Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra & Anr. [2005 (4) TMI 566 - SUPREME COURT], inter-alia, held that the role of the appellant was said to be of rendering help and support to the organizing crime syndicate while functioning as Commissioner of Police at different places. The Apex court was essentially concerned with the operation of Section 24 of MCOCA providing for punishment of public servant failing in discharge of their duty. However, the court taking overall view of the matter with reference to the facts from the prima facie opinion that the High Court might not have been correct while coming to the conclusion that the appellant committed an offence under Section 3(2) as well as Section 24 of MCOC Act; the interim bail granted to the appellant was continued. In this case, it was inter alia held 'There are offences and offences under the Penal Code, 1860 and other penal statutes providing for punishment of three years or more and in relation to such offences more than one charge-sheet may be filed. As we have indicated herein before, only because a person cheats or commits a criminal breach of trust, more than once, the same by itself may not be sufficient to attract the provisions of MCOCA. Furthermore, mens rea is a necessary ingredient for commission of a crime under MCOCA.'.
It is a well settled proposition that these conditions are cumulative and not alternative. It was reiterated in Sandeep Omprakash Gupta [2022 (12) TMI 1103 - SUPREME COURT] that the satisfaction contemplated regarding the accused being not guilty has to be based on reasonable grounds and the expression "reasonable grounds" means something more than prime facie grounds. It was further inter alia held that it contemplates substantial provable causes for believing that the accused is not guilty of the alleged offence.
In the present case, as per the prosecution, the evidence against the petitioner is that she was roped in by Sukesh Chandra Shekhar to facilitate him to get in touch with various bollywood celebrities and the petitioner was always in knowledge of the fact that Sukesh Chandra Shekhar is running organized crime syndicate in Tihar Jail - It is an admitted case that the petitioner was not directly involved in the foundational crime. However, taking into account the fact that the mens rea is a necessary ingredient, this court even at the stage of bail has to examine and evaluate whether the petitioner was a member of the organized crime syndicate or had required mens rea. It is pertinent to mention here that the act alleged to have been committed by the alleged accused should not only be prohibited by law but should also be a cognizable offence punishable with imprisonment for three years or more and must have been done singly or jointly as a member of an organized crime syndicate or on behalf of such organized crime syndicate.
The court is only required to evaluate and examine the case on the basis of broad probabilities. In regard to the offence to be committed in the future, the antecedents of the offender have to be seen. It is a settled proposition that at the stage of bail, the Court cannot meticulously examine the evidence and conduct a mini trial. The findings at this stage are tentative in nature and do not affect the merits of the case. The case at this stage has to be seen from the angle of prima-facie view. Even the rigors of section 21(4) of MCOCA does not completely oust the jurisdiction to grant bail, if the broad probability is in favor of petitioner.
In the present case, there is nothing on the record regarding the criminal antecedents of the petitioner. It is also to be taken into account that the accused is a woman of 52 years of age and has been in custody since 30.11.2022.
Conclusion - MCOCA is a special statute requiring strict interpretation and that the conditions for bail under Section 21(4) are cumulative and not alternative. Bail granted subject to specific conditions.
Application allowed.
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2023 (10) TMI 1503
Rejection of impleadment application filed by the appellant - Substitution of appellant as the legal representative of the deceased plaintiff - suit pending for trial for past 41 years.
Whether the impugned order passed by the High Court whereby the order passed by trial court allowing the impleadment application filed by the appellant herein had been rejected, is to be sustained or set aside? - HELD THAT:- The records would clearly indicate that Manoj Kumar Jain himself had filed an application, accompanied by affidavit before the Revisional Court in Civil Revision No.2 of 2010, stating thereunder that he would not press the application filed by him for substitution and this was sufficient for the High Court to have accepted the plea of the appellant or in other words, it should have sustained the order of trial court and ordered for appellant being brought on record as legal representative of deceased Urmila Devi.
The impugned order which has resulted in rejection of the application filed by the appellant to be brought on record as legal representative of Urmila Devi if sustained would result in the estate of deceased plaintiff not being represented, as a consequence of which suit would abate or would be put to a silent death by the defendants without claim made in the suit being adjudicated on merits. Hence, question is answered in favour of the appellant and against respondents and therefore, the impugned order is set aside.
Whether any further direction or directions requires to be issued for concluding the proceedings in a time bound manner on account of Suit pending for trial for past 41 years? - HELD THAT:- The very fact of the pendency of the present suit No. 2 of 1982, in the instant case, for the past 41 years is reflective of the fact, as to how some of the civil courts are functioning and also depicting how stakeholders are contributing to such delays either directly or indirectly. The procedure that is being adopted by the courts below or specifically the trial courts is contrary to the express provisions of the CPC. It can also be noticed that there are party induced delays. It is laid down under Orders VIII Rule (1) that a defendant shall at or before the first hearing or within 30 days, or 90 days as the court may permit, present a written statement of his defence. In most cases, there would be no difficulty in presenting such a written statement on the date fixed, and no adjournment should be given for the said purpose except for a good cause shown, and in proper cases, costs should be awarded to the opposite side, namely realistic costs. However, this is seldom found.
It is high time that the presiding officers of all the trial courts across the country strictly enforce the time schedule prescribed under sub-rule (1) of Rule (1) of Order VIII in its letter and spirit rather than extending the olive branch on account of said provision being held directory to its illogical end even where circumstances of a particular case does not warrant time being enlarged. Although Order XVII of the CPC indicate under the heading “adjournments”, making it explicitly clear the procedure which requires to be adopted by the civil courts in the matter of trial, as evident from plain reading of the said provision would reveal, seems to have been completely lost sight of by all the stakeholders, which can be held as one of the root cause for delay in disposal of civil cases.
Conclusion - i) The High Court's order set aside by reinstating the trial court's decision on substitution. ii) It is imperative to note that about 6 per cent of the population in India is affected by litigation, in such a scenario the courts would play an important role in the life of a nation governed by Rule of Law.
Petition disposed off.
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2023 (10) TMI 1502
Fraudulent and Unfair Trade Practices - Trading in illiquid stock options done by the Noticee during the Investigation Period was in violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations - whether the Noticee is liable for a levy of monetary penalty u/s 15HA of the SEBI Act and if yes, how much should be the penalty?
HELD THAT:- Noticee had contributed to the artificial volume in the range of 10.81% to 22.57% vs total market volume in the said contracts. Thus, find that the Noticee by executing non genuine trades, had contributed to the creation of artificial volumes in the said contracts.
Trades between the Noticee and the counterparties were a consequence of pre-meditated decision of all the parties and hence are unfair trades as per PFUTP Regulations. It cannot be a matter of coincidence or lack of awareness, or without knowledge of the counterparties. Hence, the trades placed on the stock exchange platform by mutual understanding are non-genuine trades, which are prohibited under PFUTP Regulations.
Noticee’s transactions, were fraudulent/ manipulative, as contemplated in the PFUTP Regulations. Hence, as inclined to impose monetary penalty on the Noticee.
Quantum of penalty to be levied, we take into regard the manipulative nature of the trades placed by the Noticee that has led to creation of artificial volume in the contract.
Determine the quantum of penalty to be imposed, bearing in mind the parameters laid down in Section 15J of the SEBI Act. The amount of disproportionate gain or unfair advantage is not quantifiable. Therefore, considering all the facts and circumstances in this matter, we are inclined to impose a minimum penalty against the Noticee, as provided under Section 15HA of the SEBI Act.
As per the provisions of the Amendment of Section 15HA vide the Securities Laws (Amendment) Act, 2014, that came into force on September 08, 2014, the penalty shall not be less than five lakh rupees. In the instant case, it is observed that the violation of the PFUTP Regulations, took place after the aforesaid date, therefore, the penalty shall not be less than five lakh rupees.
Therefore, in exercise of powers conferred upon me under Section 15-I(2) of the SEBI Act read with Rule 5 of the Adjudication Rules, I hereby impose a penalty of Rs 5,00,000/- (Rupees Five Lakhs only) upon the Noticee i.e., Manoj Jain HUF (PAN No: AAJHM5595D) under Section 15HA of the SEBI Act for violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) of the PFUTP Regulations.
Noticee shall remit / pay the said amount of penalty within 45 days of receipt of this order through online payment facility available on the website of SEBI.
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2023 (10) TMI 1501
Validity of reopening of assessment - reassessment beyond four years - reasons to believe - Revenue appeal was dismissed on the ground of Low Tax Effect and then recalled by order in M.A on the ground that though the tax effect is less than Rs. 50 lacs because of the audit objection involved in this case which is exclusion clause 8(c) of the CBDT Circular No. 3/2018.
Whether the CIT(A) is erred in holding the reopening of the assessment is bad in law, without appreciating the fact that the Revenue has reopened the case based on some materials/information available, which is within the meaning of clause (ca) of explanation 2 of section 147? - HELD THAT:- As in the case of CIT Vs. Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI HIGH COURT] clearly held that the AO does not have any jurisdiction to review his own order, his jurisdiction is confined only to rectification of mistake as contained in section 154 of the Act, that too “mistake apparent on record” and not on debatable issues.
Thus the only remedy left with the department is to invoke Revision proceedings u/s. 263 of the Act, to revise the assessment order by the Commissioner of Income Tax on the ground that the assessment order is erroneous and prejudicial to the interest of Revenue.
Wherever a regular assessment order is passed by AO, it is presumed that the order was passed after application of mind, thereby AO are not given powers to reopen the assessment on the same set of facts in the absence of tangible material.
We have no hesitation in holding that when there is no failure on the part of the assessee in disclosing the income and No new tangible material on record, the reopening of assessment after 4 years period amounts to “change of opinion” only. Therefore the reopening of assessment invalid in law. Thus the finding arrived by the Ld. CIT(A) does not require any interference. Decided in favour of assessee.
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2023 (10) TMI 1500
Interpretation of statute - amendment to the Sugarcane (Control) Order 1966 - Dismissal of the writ petition holding that the omitted Clause 5A of the Sugarcane Control Order, 1966 can be invoked against the members of the Appellant Association - HELD THAT:- The sheet anchor of the argument of the appellants is that after the amendment in 2009 to the Sugarcane Control Order, deleting the Statutory Minimum Price and substituting Fair and Remunerative Price consequently omission of Second Schedule with effect from 22.10.2009 leads to a situation where the first respondent has no jurisdiction to determine the "L" Factor for the sugar seasons 2004-2005 to 2008-09. It is further contended that omission of a Second Schedule with effect from 22.10.2009 is a deletion and no action can be taken on deleted / omitted provision since Section 6 of the General Clauses Act would have no application to a Control Order which is neither an enactment nor a regulation in terms of Section 6 of the General Clauses Act.
The Writ Court, taking into consideration the scope of Essential Commodities Act, the object of the Sugarcane Control Order, the decisions of the Hon'ble Supreme Court in Union of India v. Cynamide India Ltd and another [1987 (4) TMI 478 - SUPREME COURT] and K. Ramanathan v. State of Tamil Nadu and another [1985 (2) TMI 249 - SUPREME COURT], observed that no attempt can be permitted to be made to dilute the object and if done, would be against the public interest.
The right of cane growers to be entitled for Statutory Minimum Price (SMP) is a statutory right. It accrues on the date when supply of sugarcane is made to the sugar mills. The Central Government, though thought fit to introduce a new system of determining fair price and brought into effect Fair Remunerative Price, that would not in any manner affect the rights of cane growers to be entitled to SMP, which was very much available in the Sugarcane Control Order at the relevant time during which supply of sugarcane has been done.
Nowhere in the amendment in the year 2009, there is any such intention to obliterate or to deny the benefit which has accrued in favour of the cane growers. The Central Government is right in its stand that the Sugarcane Control Amendment Order, 2009 dated 22.10.2009 is prospective with effect from the date of its publication in the Official Gazette and no time limit has been fixed for arriving at "L Factor. Such a ground cannot be raised by the appellant to deny and defeat the vested rights of the cane growers. The Writ Court has considered all the aforesaid aspects in proper perspective and this Court, in exercise of is appellate jurisdiction, finds no reason to interfere with the order of the Writ Court and accordingly the writ appeal is liable to be dismissed.
Conclusion - i) The omission of Clause 5A and the Second Schedule does not retroactively affect the rights of sugarcane growers to receive additional pricing for supplies made before the amendment. ii) Section 6 of the General Clauses Act applies to subordinate legislation, preserving accrued rights despite the omission of provisions.
Appeal dismissed.
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