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Showing 1 to 20 of 1682 Records
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2023 (9) TMI 1683
Income deemed to accrue or arise in India - reimbursement of expenses qua marketing fees, frequent flyer programme, guest programme and reservation fees received by the respondent/assessee cannot be treated as fee for technical services, in terms of Article 12(4) of the Indo-Singapore DTAA and under Section 9(1)(vii) - HELD THAT:- This issue stands covered by the following judgments Sheraton International Inc. [2009 (1) TMI 27 - DELHI HIGH COURT], Sheraton International Inc. [2023 (5) TMI 1435 - DELHI HIGH COURT] and Starwood Hotels & Resorts Worldwide Inc. [2022 (11) TMI 1492 - DELHI HIGH COURT]
Therefore, according to us, no substantial questions law arises for consideration.
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2023 (9) TMI 1682
Seeking extension on stay of recovery of outstanding demand - HELD THAT:-While considering the initial stay application filed by the assessee, the Tribunal had granted conditional stay vide order dated 09.09.2022, which was subsequently extended vide order dated 17th March, 2023.
Cause for non-disposal of the corresponding appeal is not attributable to the assessee. We are informed, now the appeal is fixed for hearing on 08.11.2023. Since, there is no change in the facts and circumstances of the case, based on which stay was earlier granted, we are inclined to extend stay on recovery of outstanding demand for a further period of 180 days from the date of this order or till the disposal of the corresponding appeal, whichever is earlier. Stay application is allowed.
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2023 (9) TMI 1681
Income chargeable to tax in India or not - payment made by the assessee to its foreign entity towards use of overall ICT infrastructure - DTAA between India and Netherlands - Scope of amended DTAA provisions - HELD THAT:- On a perusal of the amendment to Article 12(4) of the DTAA effective from 01-04-1998, it is clear that the term ‘Royalties’ means payment received as a consideration for the use or right to use any copyright including any patent, trademark, design or model for information concerning industrial, commercial or scientific experience.
The hitherto inclusion of payment for use of industrial, commercial or scientific equipment constituting ‘Royalties' under para 4(b) of article 12 as per Para (III) in para 4(b) has been omitted w.e.f. 01-04-1998.
Since the assessment year involved is 2012-13, on a pertinent query as to whether the DTAA was further amended vide any Notification, AR answered it in negative by placing on record a copy of the DTAA.
When we consider the copy of original DTAA with the copy of the DTAA as now given, it is seen that after clause VII of the Protocol in the originally filed DTAA, there is a heading ‘Amending Notification No. SO 693(E), dt. 30-08-1999’ and thereafter mention is made of the Paras (III) and (VI) which are under consideration.
No reason could be adduced as to why there was change in the text of two copies of the DTAA. DR expressed his inability to point out if any further amending notification was also issued in respect of the DTAA having impact on the ambit of Article 12(4) from 1998 up to the financial year relevant to the A.Y. 2012-13 under consideration.
It would be just and fair if the impugned order on this issue is set aside and the matter is restored to the file of the AO for examining the position of the DTAA prevailing for the assessment year under consideration and then deciding the issue by treating the amount paid by the assessee as a consideration for use of the overall Infrastructure facility of VIBV.
If the amending notification dated 30-08-1999 is the last notification, in that situation, the case will fall under Para (VI) and not Para (III), making the amount not chargeable to tax in the hands of VIBV. In the otherwise scenario, the AO will examine the effect of such further amendments, if any, to Article 12(4) to the DTAA for deciding the issue in the right perspective. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings. The originally order passed u/s.254(1) is amended to this extent.
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2023 (9) TMI 1680
Taxability in India of an amount received as salary income -determination of assessee’s residential status - assessee has claimed that the salary income was not received by her towards any service exercised in India, but was received in USA - HELD THAT:-We find that the assessee has not brought on record before the departmental authorities necessary and relevant material such as TRC, evidences regarding earning of salary income outside India and evidence regarding stay outside India during the entire year etc.
In our view, aforesaid evidences are vital for deciding the claim of the assessee. Since, assessee has submitted before us that as on date she is in possession of TRC issued by the competent authority, we are inclined to restore the issue to the AO for de novo adjudication so as to enable the assessee to furnish TRC and any other credible evidence to establish her claim of treaty benefit and also that the salary income did not arise or deemed to have arisen in India in terms of section 5(2)(a) of the Act.
AO is directed to consider the evidences in proper perspective and decide the issue accordingly after providing reasonable and due opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
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2023 (9) TMI 1679
Addition u/s 56(2)(vii)(b)(ii) - difference in the stamp value of the property and sale consideration has to be assessed under Income from other sources - as argued assessee has made payments for purchase of property through account payee cheques and complied with the provisions of the Act.
HELD THAT:- We find that in the appellate proceedings before the CIT(A), the assessee has mentioned about the understanding and the oral agreement fallowed by the payments in the F.Y 2012-13 through banking channel and the provisions of Sec. 56(2)(vii)(b)(ii) of the Act are complied.
Whereas the submissions of the assessee on the disputed issue made before the CIT(A) are emerged for the first time and the A.O has to examine the facts and the nature of transactions. Accordingly, to meet the ends of justice, we set aside the order of the CIT(A) and restore the entire disputed issues to the file of the Assessing officer to examine and verify the issues discussed above. Appeal filed by the assessee is allowed for statistical purposes.
Penalty u/s 271(1)(b) - assessee has not disclosed the reasonable cause for non compliance to the notice u/s 142(1) - HELD THAT:- We found that the submissions made by the Ld. AR are realistic and when the assessment was completed u/s 143(3) r.w.s 263 of the Act, the penalty u/s 271(1)(b) of the Act cannot be imposed.
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2023 (9) TMI 1678
Additions u/s 143(1)(a)(iv) - late deposit of ESI/EPF of employee share - HELD THAT:- We find that the issue is no more res integra as Hon’ble Apex Court has conclusively decided the issue in the case of Checkmate Services P. Ltd [2022 (10) TMI 617 - SUPREME COURT] that no infirmity in AO's action in the addition u/s 36(1)(va) in the total income of the appellant.
Hence no infirmity in the order of the CIT (A) and uphold the same. Appeals filed by the assessee are dismissed.
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2023 (9) TMI 1677
Adjustments made u/s. 143(1)(a)(iv) while processing the return of income u/s. 143(1) - powers/scope given to CPC, Bangalore through section 143(1) - HELD THAT:- Neither assessee’s response to proposed adjustment was considered, nor application u/s. 154 of the Act was disposed of, these falls in the violation of proviso 1 and 2 of the section 143(1) and makes whole action null and void. Further, as the case of assessee was scrutinized u/s. 143(2) and assessment order u/s. 143(3) was passed, technically the doctrine of merger comes into picture, therefore the impugned adjustment by CPC gets merged into order passed u/s. 143(3) of the Act and order passed u/s. 143(3) only survives.
As far as reporting by Tax Auditor is concerned, maybe he has been appointed by the assessee, still his independence is always assumed and he is always free to give his own legal opinion, but the same is not binding on assessee or revenue.
Thus, final order in this case is assessment order passed by AO u/s. 143(3) r.w.s. 144B and not the intimation/order passed by CPC, Bangalore u/s. 143(1). Effectively, when order passed by AO u/s. 143(3) r.w.s. 144B of the Act is final and therein no such addition is there, whole issue becomes academic including the appeal order passed by the Ld. CIT (A) U/s. 250 of the Act. In the result grounds of appeal raised by the assessee is allowed.
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2023 (9) TMI 1676
Maintainability of the writ petition under Article 226 read with Section 482 of the Criminal Procedure Code (Cr.P.C.) to challenge the LOC - Rejection of request to revoke the Look Out Circular (LOC) - summoning of the petitioner under section 50 of PMLA on suspicion alone.
Whether the summoning of the petitioner under section 50 of PMLA on suspicion alone is legally permissible? - HELD THAT:- In the instant case, there is no cognizable offence registered against the petitioner nor a non-bailable warrant is issued against the petitioner. The petitioner is summoned solely on the ground that his brother has been implicated as an accused in the scheduled offences and under the PMLA, and also alleging that his father had transferred 50,000 GBP which is the proceeds of the crime to a third party.
Section 50 is a crucial provision and states that a person, who is being summoned for investigation must be provided with a written notice specifying the nature and the reasons for it. While the said provision does not explicitly use the term " Probable cause", it emphasizes the importance of providing valid reasons and grounds for summoning an individual. The purpose of this provision is to protect the right of the person being summoned and ensure that investigation is not arbitrary. The summoning of a person repeatedly without probable cause or reasonable ground and only on the ground of suspicion alone is not in accordance with the principles of due causes and fairness.
LOC cannot be issued solely on the ground that the petitioner has not provided information to the convenience and satisfaction of the respondent No. 2, and in the absence of any material that the petitioner was aware of the transactions between his father and one Mr. Hanish Patel, the petitioner cannot be repeatedly summoned to give information to suit the convenience of the prosecution - It is well established in law that a person can be summoned to give statements during the course of investigation only when there exists a reasonable ground to believe that the said person has knowledge or information with regard to the commission of a crime. The principle of reasonable suspicion/ probable cause is fundamental to the criminal justice system and it ensures that persons are not subjected to investigation or summoned to give statements during the course of investigation which would otherwise result in violating the principles of fairness, justice and the Rule of Law, more so when the petitioner has cooperated with the investigation.
The Hon'ble Supreme Court in the case of SELVI AND OTHERS -VS- STATE OF KARNATAKA, [2010 (5) TMI 907 - SUPREME COURT] with reference to Article 20(3) and 161(2) Cr.P.C., has held that these provisions protect the accused, suspects and witnesses from being compelled to make self incriminating statements and the person concerned has right to remain silent on questions which may incriminate him.
Therefore, in the absence of any reasonable suspicion leave alone probable cause, the LOC issued for securing the presence of the petitioner for recording further statements would be arbitrary and violate the fundamental rights enshrined under Article 21 of the Constitution of India.
Maintainability of the writ petition under Article 226 read with Section 482 of the Criminal Procedure Code (Cr.P.C.) to challenge the LOC - HELD THAT:- The proceedings initiated under the provisions of PMLA against the brother of the petitioner is the basis for issuing LOC and any action taken or order passed under PMLA can be challenged by invoking inherent jurisdiction under Section 482 Cr.P.C or under Article 226 r/w Section 482 Cr.P.C to prevent the abuse of the process of law/or to secure the ends of justice. Hence, the fundamental right of the petitioner to travel abroad as enshrined in Article 21 of the Constitution of India is infringed by the respondent No. 1 in the course of investigation under the provisions of PMLA. The petitioner has been restrained from travelling abroad for a period of 1 year 10 months spreading over from January 2021 till date. Therefore, the contention of the learned ASG that the LOC can only be challenged under Article 226 and not under 482 Cr.P.C. is not acceptable.
Conclusion - The continuation of the LOC against the Petitioner indefinitely on the ground of suspicion alone will be an abuse of process of law and also the object of LOC.
Petition allowed.
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2023 (9) TMI 1675
Challenge to impugned order on the ground that the same has been passed beyond the limitation prescribed under Section 28 (9) of the Customs Act, 1962 - HELD THAT:- The show cause notice, dated 26.12.2014, had to be examined in the light of Section 28 (9) as it stood prior to the amendment w.e.f. 29.03.2018. Therefore, the show cause notice was required to be adjudicated within six months from the date of issuance of such notice. The above limitation was qualified with expression '' Wherever, it is possible, to do so''. Prima facie, it appears that the Department was not precluded from adjudicating the show cause notice beyond six months.
If it is the case of the Department that the pendency of the Appeal before CESTAT against the Order-in-Appeal dated 30.08.2015 was a reason for not passing orders earlier, it remains to be explained, as to why, the impugned order has been passed eventhough the petitioner's appeal is still pending adjudication before CESTAT - This ought to have been explained properly in the impugned order. Admittedly, the impugned order passed by the third respondent is bereft of such reasons. Only in the counter affidavit filed in this Writ Petition, the respondents have stated that the delay was on account of the pendency of the Appeal before the CESTAT for the earlier Bills of Entry, dated 10.10.2014.
Conclusion - The indifference of the concerned officer to complete the adjudication within the time period as mandated, cannot be condoned to the detriment of the assessee.
This Court is inclined to interfere with the impugned order by quashing the same and remits the case back to the third respondent to pass a fresh order on merits - petition allowed by way of remand.
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2023 (9) TMI 1674
Validity of assessment u/s 153A - HELD THAT:- As the assessment order passed u/s 143(3) r.w.s. 153A of the Act for all the assessment years under appeal are liable to be quashed in view of the decision of the Hon’ble Supreme Court [2023 (4) TMI 1056 - SUPREME COURT] as well as subsequent instructions notified by the CBDT Instruction No. 1 of 2023 dated 23.08.2023 vide letter F. No. 279/Misc./M-54/2023-ITJ. Accordingly, the additional grounds raised by the Revenue for the assessment years 2010-11, 2011-12 and 2012-13 are dismissed.
Addition made towards disallowance of expenditure towards special salary & commission charges - As we are of the opinion that the additions made by the AO are unwarranted, which was rightly deleted by CIT(A). Thus, we find no infirmity in the order of the ld. CIT(A) on this issue. Accordingly, the ground raised by the Revenue is dismissed for the assessment years under appeal.
Addition u/s 40(a)(ia) - Payment made to contractors w/o deducting TDS - assessee has submitted that the contract-labourers are in the muster roll of the assessee and are covered by the ESI/PF Act - HELD THAT:- No incriminating material like contract agreement, etc. was brought on record. CIT(A) has observed that the AO was misled by the statement given by Shri Murugesan as reported in the appraisal report and never bothered to examine the liability of the assessee to deduct tax at source independently with reference to the facts of the case. In view of the above undisputed facts, the ld. CIT(A) has rightly deleted the disallowance made u/s 40(a)(ia) of the Act by holding that the assessee has directly engaged labourers borne in the Provident Fund records and made payments through the head labourer and therefore, there was no liability to TDS. CIT(A) has rightly deleted the disallowance made under section 40(a)(ia).
Addition on brought notes - purchases made through bought notes - HELD THAT:- By considering the submissions that inasmuch as the entire amount was offered to tax as bought note purchases and the same was credited in the profit & loss account, which the Assessing Officer wrongly mentioned in the assessment order as ₹.1,74,32,430/-, thereby adding a further sum of (₹.1,74,32,430 – 1,71,32,430) ₹.3,00,000/- was not called for. Considering the above facts, we find that the ld. CIT(A) has correctly deleted the addition of ₹.3,00,000/-, which was erroneously added to the total income of the assessee. Thus, the ground raised by the Revenue is dismissed for AY 2011-12.
Disallowance of expenditure by cash purchase - CIT(A) deleted addition - HELD THAT:- We find that no cash payment was made by the assessee. Moreover, all the purchase of copras are through agent and the payments were made to these agents through banking channel i.e., RTGS. No reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for the assessment years under appeal.
Disallowance of expenditure violating the provisions of Section 40A(3) and bogus purchase - HELD THAT:- CIT(A) has noted from the assessment order that the AO has admitted the fact that payments were made through RTGS. AO has not made a mention in the assessment order that for the purchase of copra, cash payments were made by the assessee and moreover, the AO has also not disputed the purchase of copra. CIT(A) has rightly observed that the disallowance by treating the RTGS payments as cash payment was not correct and consequently, deleted the addition for the assessment year 2012-13.
AO failed to establish that the assessee made purchases by paying cash. It is a fact that the entire payments were made by the assessee through RTGS to its agent. It is a mere allegation by the Assessing Officer that the assessee purchased the copras by paying cash. The assessee, in fact, made payments through RTGS only. In turn, the agents issued bearer cheques according to their convenience. Therefore, AO was not justified in invoking the provisions of section 40A(3) in the case of the assessee - ground raised by the Revenue is dismissed.
Addition made towards suppression of purchase along with estimated gross profit - HELD THAT:- AO took the value of purchases as appearing in the SAP from May 2011 to March 2012 (i.e., for 11 months) and compared the figures of purchases as taken from the parties ledgers from April 2011 to March 2012 (12 months), In effect the Assessing Officer, by mistake compared the 11 months' figures of the assessee with that of 12 months' figures of the parties. Naturally there is every likelihood of arriving at a variation.
Based on this (wrong) methodology the AO arrived at the suppression of purchases. Thus CIT(A) has observed that the addition was due to erroneous adoption of purchase figures, the AO made an huge unwanted addition and thus, the CIT(A) was reluctant to sustain the addition. We also find that the AO was not able to establish suppression of purchases made by the assessee.
Suppression of closing stock - HELD THAT:- Assessee has duly submitted the reconciliation statement and reasons for the difference before the AO which was unfortunately not considered. Before the ld. CIT(A) the assessee has produced copy of the actual value of closing stock (with quantity) as furnished to the Central Excise Department. After considering the detailed written submission filed by the assessee as was submitted before the Assessing Officer, which was not considered by him, the ld. CIT(A) observed that the closing stock as on 31.03.2012, as reported in the return of income by the assessee do not warrant any further alteration and it shows the correct position as on that date. Accordingly, the ld. CIT(A) deleted the addition towards suppression of stock correctly. - ground raised by the Revenue is dismissed.
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2023 (9) TMI 1673
Validity of Reopening of assessment - petitioner contends that, though reply with documents is filed upon receipt of notice u/s 148A(b) the impugned order is passed primarily on the ground that the petitioner has not furnished the reply - HELD THAT:- If the provisions of Section 148A of the IT Act do not stipulate that the reply must be filed within the time allowed in the notice under Section 148A[b] of the IT Act but the response is filed before the date of order u/s 148A (C), the second respondent should have been considered. Crucially, in the present case, the observation is that the Assessee has not filed any reply at all. Therefore, this Court must intervene and allow the petition on this limited ground directing the second respondent to consider the reply and pass proceedings afresh under Section 148A(d) of the IT Act with the Department being entitled to all consequential extension in the limitation.
Thus order passed u/s 148A(d), the Notice u/s 148 and all the impugned consequential demands/penalty notices are quashed.
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2023 (9) TMI 1672
Failure to abide by the requirement of the pre-show cause notice consultation as provided in Master Circular dated 10th March, 2017 - demand of duty involves more than Rs. 50,00,000/- - HELD THAT:- The respondent authorities are directed to undergo the process of pre-consultation keeping the impugned show-cause notice/order in original in abeyance and place the outcome of such pre-consultation on record before the next date of hearing. Such exercise shall be completed within four weeks.
Stand over to 26th October, 2023.
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2023 (9) TMI 1671
Validity of adjudication order - Petitioner’s representation not properly considered and dealt with - difference between non-consideration of the objection/ submission - Constitutional validity of retrospective amendment to Rule 61 of the WBGST Rules, 2017 - HELD THAT:- Learned Additional Government Pleader submits that before passing the impugned order, ample opportunity of hearing was given to the petitioner and principles of natural justice was observed and the impugned order contained detailed reasons and discussion. If petitioner is not satisfied with the sufficiency of the reasons recorded by the Adjudicating Authority which is based on findings and evidence. This court in exercise of Constitutional writ jurisdiction under Article 226 of the Constitution of India cannot act as an Appellate Authority and substitute the reasoning and findings of the Adjudicating Authority with its own.
Furthermore, the impugned order is an appealable order and it is not a case of the petitioner that the alternative remedy available to the petitioner is not speedy and efficacious.
Following the abovementioned reasons, this court does not inclined to interfere with the impugned adjudication order. However, since Constitutional validity of retrospective amendment to Rule 61 of the WBGST Rules, 2017 has been challenged in this writ petition, this writ petition will be heard only on this issue upon exchange of affidavits by the parties.
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2023 (9) TMI 1670
Allotment of shares on a "preferential basis by way of private placement," pursuant to an order under Sections 241-242 of the Companies Act, 2013 - adherence to Section 62(1)(c) of the Act, along with the applicable Companies Act (Share Capital and Debentures) Rules, 2014 or not - HELD THAT:- Section 62 (1) (c) specifies ‘issuance of share capital to any persons, if it is authorised by a said Resolution, whether or not these persons including the persons referred to in Clause (a) or Clause (b) either for cash or for consideration other than cash, if the price of such shares is determined by the valuation report [of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed]. Merely because the direction given by NCLT does not specifically mention the fulfilment of mandatory requirements of Section 62 (1) (c), it cannot be said that those Provisions need not be complied with as it has not been specifically mentioned in the ‘directions’ and the same has been confirmed by both NCLAT and the Hon’ble Apex Court. Under Rule 13 (g) of the Companies (Share Capital and Debentures), Rules 2014 and Rule 12 (7) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 framed under the said Provision, details the procedure to be followed in this regard.
It is not in dispute that the shares were allotted at face value of Rs. 10/- each without conducting any valuation. It is significant to mention that the Appellants have convened an Extraordinary General Meeting on 15/06/2017 to discuss the agenda of amendment to the Company’s Memorandum of Association for increasing the authorised share capital of the 1st Appellant Company. A perusal of the Notice dated 20/05/2017 shows a reference to legal advice provided for the dispensation of the requirement for the shareholders approval - As per Sections 242(5) and 242(6) of the Companies Act, only such Orders which specifically provide for alteration to Memorandum of Association would be deemed to have been passed in accordance with Law and the Company accordingly needs to take steps to put the Order into effect.
The Hon’ble Delhi High Court in the matter of ‘SAS Hospitality Pvt. Ltd. Vs. Surya Constructions Pvt. Ltd.’ [2018 (12) TMI 1123 - DELHI HIGH COURT] has held that any dispute pertaining to rectification of Register of Members can be decided under Section 59 of the Act.
This Tribunal is of the earnest view that the issue regarding cancellation of allotment of shares to the 2nd Appellant would fall within the scope and ambit of Section 59 of the Act. As regarding the submission of the Learned Counsel for the Appellants that NCLT has wide scope of powers under Section 241 and 242 of the Act and any direction given in this Section would not contemplate compliance to Section 62 (1) (c) of the Act, cannot be sustained. It is held that even if NCLT has directed allotment of shares under Section 241 and 242 of the Act, the procedural requirements in respect of such allotment, has to be met.
Conclusion - This Tribunal is of the earnest view that allotment of shares leading to alteration in the Register of Members can be challenged before the NCLT under Section 59 of the ‘Act’. Finally, it is observed that the issue which has attained finality is the ‘allotment of shares’ and not the ‘procedure to be adopted for allotment’.
Appeal dismissed.
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2023 (9) TMI 1669
Valuation of Arms Length Price (ALP) of the Specified Domestic Transactions (SDT) between the assessee and its Associated Enterprises (AEs) for purchase of trading goods - Effect of clause (i) of section 92BA omission - AO had made a reference to Transfer Pricing Officer u/s. 92CA of the Act to determine ALP with respect to SDT u/s. 92BA(1) - HELD THAT:- We are of the view that Coordinate Benches have taken a view that since clause (i) of section 92BA stands omitted from the provision and omission of such is to be construed as if it never existed in the Statute Book and if it never existed in the Statute Book, then, no Arm's Length Price is required to be determined for a transaction with specified persons in section 40A(2)(b) of a domestic transaction. If no Arm's Length Price is required to be determined, then, no reference was required to be made.
See Texport Overseas Pvt. Ltd. [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] wherein held when clause (i) of section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken the Assessing Officer under the effect of section 92BI and reference made to the order of Transfer Pricing Officer TPO under section 92CA could be invalid and bad in law. Appeal of the assessee is allowed.
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2023 (9) TMI 1668
Dismissal of Section 9 application filed by the Operational Creditor - seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor - Appellant had failed to establish beyond doubt that the unpaid operational debt was subsisting above the minimum threshold limit of Rs. 1 crore - HELD THAT:- A plain reading of Section 10A signifies that no application/ proceedings under Sections 7, 9 and 10 can be initiated for any default in payment which is committed during Section 10A period. Thus, what is essentially barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings.
The law of Section 10A is well settled. The object and purpose of Section 10A has been explained in the ordinance by which Section 10A was brought into operation - The aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing. It was never intended to cover any default which occurred before Section 10A period and continuing thereafter.
The present is a case where default has been committed by the Corporate Debtor since 29.02.2020 which is prior to commencement of Section 10A period. Hence, this is a case where the default was undisputedly committed before the bar of Section 10A came into play. There being categorical default by the Corporate Debtor prior to Section 10A period, the Corporate Debtor was clearly not entitled to claim the benefit of Section 10A period.
Quantum of unpaid operational debt above the minimum threshold limit of Rs. 1 crore or not - HELD THAT:- This finding of the Adjudicating Authority has been challenged by the Appellant on the ground that a creditor is entitled to apply his own discretion to appropriate any on-account payment received from the debtor against any outstanding debt(s) due from the debtor in terms of the Indian Contract Act, 1872 - A plain reading of Section 60 of the Indian Contract Act 1872, shows that if the debtor makes any payment without any appropriation, then the creditor can use his discretion to wipe out any of the remaining debt(s) which is/are due. The right of appropriation lies with the creditor if the debtor does not indicate in what manner the debt is to be discharged. In such circumstances, the creditor has a lot of scope for exercising his right in such a manner so as to put himself in the most advantageous position - Without explaining how this action has Operational Creditor has been in contravention of the statutory provisions contained in the Indian Contract Act, it has therefore been unreasonable on the part of the Adjudicating Authority to hold that there is an inconsistency in the pattern adopted by the present Appellant while adjusting payments received against outstanding dues.
Conclusion - There are no hesitation in holding that the finding returned by the Adjudicating Authority that the criterion of minimum threshold limit of Rs 1 crore is not met in the facts of the present case is not tenable.
The Section 9 application filed by the Appellant is revived and remanded back to the Adjudicating Authority to be considered again in accordance with law - appeal allowed.
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2023 (9) TMI 1667
Denial of deduction u/s 80P - interest income earned from deposits placed with the bank - expenditure incurred in relation to earning interest income taxable under Section 56 can be allowed under Section 57 of the Act or not?
HELD THAT:- In the light of the judgment of Mantola Co-operative Thrift & Credit Society Ltd. [2014 (9) TMI 833 - DELHI HIGH COURT] we do not see any merit in the plea of the assessee for claim of deduction.
Expenditure incurred in relation to earning interest income taxable - We notice that there is no discussion or finding on allowability of expenditure u/s 57 incurred in relation to earning of interest taxable income u/s 56 of the Act. Hence, we consider it expedient to remit the matter back to the file of AO for re-determination of taxable income for giving appropriate allowances towards expenditure connected to the earning of interest income in accordance with law.
Assessee society would be entitled to general relief of Rs.50,000/- provided under Section 80P(2)(c)(ii) of the Act and out of the income assessed under the head ‘business income’. Assessee appeal partly allowed.
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2023 (9) TMI 1666
Estimation of income - bogus purchases - CIT(A) restricted addition at a rate of 6% - HELD THAT:- The Tribunal relied upon the judgement of Pankaj A Chaudhary [2021 (10) TMI 653 - ITAT SURAT] wherein the coordinate bench at Surat had sustained the addition at the rate of 6% of bogus purchases.
Tribunal correctly partly allowed the appeal filed by the assessee and reduced the dis-allowance at 6% on the disputed purchases. This Court in appeal filed by the Revenue, confirmed the order passed by the Tribunal.
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2023 (9) TMI 1665
Condonation of delay of 838 days caused in filing the appeal - power of Appellate Court to entertain an appeal filed beyond the statutory period of 90 days, as stipulated in the second proviso to Section 21(5) of the National Investigation Agency Act, 2008 (NIA Act) - HELD THAT:- The Kerala High Court in the case of NASIR AHAMMED VERSUS NATIONAL INVESTIGATION AGENCY [2015 (5) TMI 1264 - KERALA HIGH COURT], has taken the view, that the Statute provides 30 days period for filing of an appeal against the judgment, sentence or order and gives a discretion to the appellate Court to condone the delay, subject to showing sufficient cause, beyond the period of 30 days, but not beyond the expiry of 90 days from the judgment, sentence or order appealed from, and hence, the Courts cannot by entering into interpretative process re-write the mandatory provision, and that if done, would amount to legislation by courts.
The Calcutta High Court in SHEIKH RAHAMTULLA @ SAJID @ BURHAN SHEIKH @ SUROT ALI & ORS. VERSUS NATIONAL INVESTIGATION AGENCY [2023 (3) TMI 1557 - CALCUTTA HIGH COURT] has, after considering various judgments has held that Section 21 of the NIA Act is mandatory and as such delay beyond 90 days cannot be condoned under the 2nd proviso to sub-section (5) of Section 21.
Only having regard to the statutory bar prescribed under Section 21(5) of Act, an appeal is not heard, the right of an accused, whose personal liberty stands curtailed by the said judgment/sentence/order passed by the Special Court, would stand seriously jeopardized. The accused’s fundamental right to file a statutory appeal, as well as his right to access to justice, would also stand seriously jeopardized. All this, despite the accused having sufficient cause for filing the appeal belatedly. One cannot be oblivious that it is a substantive appeal, that is being considered by the Appellate Court. The right to appeal by an accused is a substantive right, a right protected by Article 21 of the Constitution. Courts cannot be mute spectators or helpless and dismiss an appeal, simply because it is filed beyond 90 days, despite sufficient cause being shown, for filing the appeal belatedly. The same is true, even in cases, where the prosecution has filed an appeal beyond the 90 days period.
The 2nd proviso to sub-section (5) of Section 21 of the NIA Act, will have to be read down, so as to read ‘shall’ as ‘may’, and as such directory, so as to vest discretion in the Appellate Court, to condone delay, beyond the 90 days period on sufficient cause being shown. If the provision were to be held mandatory, despite sufficient cause being shown by accused, the doors of justice will be shut, leading to travesty of justice, which cannot be permitted by Courts of Law.
Conclusion - i) The Appellate Courts have the power to condone delay beyond the 90 days period, despite the language of the 2nd proviso to Section 21(5) of the NIA Act and that this can be done by virtue of Section 5 of the Limitation Act, 1963, the applicability of which is not excluded under the provisions of the NIA Act. Thus, an application seeking to condone delay beyond 90 days in filing an appeal against the judgment, sentence, order, not being an interlocutory order, passed by a Special Court is maintainable, on sufficient cause being shown. ii) The word `shall’ in the 2nd proviso to sub-section (5) of Section 21, be read down, to read as `may’, and hence, directory in nature.
Application disposed off.
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2023 (9) TMI 1664
Addition u/s. 69C - unaccounted payment of salary in cash to four employees - CIT confirmed the addition on account of alleged cash payment to said two employees while deleted for other two - HELD THAT:- We are in agreement with the contention of ld. AR that in absence of providing cross examination on the said two employees whose statements have been relied by the Assessing Officer, such statements cannot be used against the assessee for making addition on account of part payment of salary in cash to the said two employees only on the basis whatsapp chats which has no evidentiary value in absence of other collaborative adverse material against the assessee showing part payment of salary in cash to the said two employees.
AO has proceeded to make addition on the basis of whatsapp chats between two employees and their statements only and no other documentary evidence or adverse positive material has been found and searched during the course of search and seizure operation.
We are unable to see any distinction between both the sets of employees. The whatsapp chats standalone basis is not having valid evidence to support the action of making addition u/s. 69C - Appeal of the assessee is allowed.
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