Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 5, 2022
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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01/2022 - dated
3-1-2022
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Cus (NT)
Amendment in Notification No.98/2021-CUSTOMS (N.T.), dated 16th December, 2021
GST - States
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74/GST-2 - dated
31-12-2021
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Haryana SGST
Notification for notifying 01.01.2022 as the date on which provisions of section 2, 3 and sections 7 to 15 of HGST (Second Amendment) Act, 2021 shall come into force.
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73/GST-2 - dated
31-12-2021
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Haryana SGST
Notification under Section 164 to bring provision of rule 2, rule 3, clause (i) of rule 6 and rule 7 of HGST (Eighth Amendment) Rules, 2021 into force from 01.01.2022 under the HGST Act, 2017
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31/2021 – State Tax - dated
24-12-2021
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Jharkhand SGST
Exempt taxpayers having AATO upto ₹ 2 crores from the requirement of furnishing annual return for FY 2020-21
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30/2021-State Tax - dated
24-12-2021
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Jharkhand SGST
Jharkhand Goods and Services Tax (Sixth Amendment) Rules, 2021.
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29/2021-State Tax - dated
24-12-2021
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Jharkhand SGST
Seeks to bring in force sections 4 and 5 of the Jharkhand Goods and Services Tax (Amendment) Act, 2021
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(4-J/2021) FD 02 CSL 2021 - dated
31-12-2021
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Karnataka SGST
Seeks to bring in force of rule (3), rule (4), clause (i) of rule (7) and rule (8) of the Karnataka Goods and Services Tax (Ninth Amendment) Rules, 2021
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(23/2021) FD 16 CSL 2021 - dated
31-12-2021
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Karnataka SGST
Seeks to bring in force various sections of the Karnataka Goods and Services Tax (Amendment) Act, 2021
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(19/2021) FD 55 CSL 2021 - dated
29-12-2021
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Karnataka SGST
Amendment in Notification (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
SEZ
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S.O.14 (E) - dated
30-12-2021
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SEZ
Central Government de-notifies an area of 11.9635 hectares at Rakha and Nimoth Villages, Tehsil-Sohna, District-Gurugram in the State of Haryana, thereby making the resultant area as 3.1242 hectares
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment u/s 147 - It is clear that the primary facts necessary for assessment were also disclosed. It is settled law that the Assessing Officer is not entitled for change of opinion to commence proceedings for reassessment. It is also settled law that when on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. Notice is hereby quashed - HC
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Rejection of application for Settlement - Validity of order of Settlement Commission Order u/s 245C - In view of the fact that the application submitted by the petitioner under Section 254C was rejected as not maintainable in view of the non-compliance of the Mandatory conditions stipulated under the provisions and the petitioner/assessee could not able to establish that he has filed an application with true and full disclosure of facts. Thus, the petitioner is not entitled for any relief as such sought for in the present writ petition. - HC
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Deduction u/s 10A - Adhoc disallowance of professional expenses, electricity charges and miscellaneous expenses - It is not in dispute that the aforesaid administrative expenses were incurred by the assessee company only in respect of its eligible units. Hence, there would be no purpose that would be served by making disallowance of certain expenses for want of evidences which were incurred in respect of eligible units. In view of the above, we direct the ld. AO to delete the disallowance of administrative expenses as it would be purely revenue neutral. - AT
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Revision u/s 263 by CIT - The Explanation–2 to section 263 of the Act can be invoked only when no enquiries or verification is carried on otherwise it cannot be invoked. In the given case, the Assessing Officer has carried on the enquiries and verification to his satisfaction which may not be to the satisfaction to the ld. Pr. CIT. Therefore, assumption of jurisdiction fails. - AT
Customs
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Revocation of Customs Broker License - The IEC forms the foundation for the entire system of controls and, in turn, is the basis for issue of various licences and scrips by the DGFT and is also the basis for Customs allowing exports. In view of the customs RMS letting 80% to 95% of the exports without either assessing the documents or examining the records, there is a very high probability of any fraudster successfully exporting the goods (or even empty containers) and claiming the export incentives and profiting from it. - Just as the officer’s responsibility ends with doing his part of the job (which may be issuing a registration without physical verification or allowing exports without assessing the documents or examining the goods), the Customs Broker’s responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. - AT
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Revocation of Customs Broker License - It is common knowledge that in designing schemes for issuing registrations, certificates or providing incentives, two conflicting objectives of due diligence and facilitation are balanced. Too many checks can make life difficult for the exporter or the citizen and too much facilitation can open the doors for frauds. Determining the golden mean and where to draw the line is a matter of public policy. The extent of liberalization or tightening may also vary greatly from one system to another and that is also a matter of public policy. - AT
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Rejection of request for provisional release of the seized goods - high end wrist watches - prohibited goods or not - In the present case, the appellant had not only deposited a substantial amount of duty proposed in the show cause notice but had also made an offer to deposit the remaining amount under protest so that the goods could be released provisionally. - Directions issued - subject to the appellant depositing the remaining balance amount of duty proposed in the show cause notice within a period of 30 days from the date of this order, the goods and the cash seized from the appellant should be released within the next 30 days- AT
Indian Laws
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Dishonor of Cheque - vicarious liability of Directors in the company - There is no specific averment in the complaint to the effect that the petitioners who are all the directors of the company are in charge of and responsible for the conduct of the business of the company. Merely saying that they are directly involved in the affairs of the company is not sufficient. Being a director of the company, he may be involved in the affairs of the company as attending the meeting of the Board of Directors, guiding the company in administrative and policy matters. But, that itself is not sufficient to hold that they are in charge of and responsible to the day to day affairs and the conduct of the business of the company - HC
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Dishonor of Cheque - Insufficient funds - The complainant’s denial about his partnership with Royal Finance is of no consequence to the accused, when the accused himself has given confusing statement about his transactions with Royal Finance. Though the learned trial Judge had appreciated this difference in the given time of the respective transactions and other circumstances, the learned Appellate Judge omitted to do so. Though the learned Sessions Judge had applied the right principle of law, that is not applicable to the facts and evidences available in the present case.- judgement of the conviction and sentence imposed is confirmred - HC
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Dishonor of Cheque - existence of the legally enforceable debt or not - In the light of the presumption under Section 139 which stands unrebutted and also the supporting materials in the form of Exts.P8 and P9 series, it is found that the cheque was issued in discharge of a legal liability towards the appellant herein - legal requirements for attracting the offence under Section 138 of the Negotiable Instruments Act regarding the issuance of notice and timeline to be followed before initiating the proceedings are seen duly complied with. - The accused is found guilty u/s 138 - HC
IBC
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Validity of Resolution Plan - Fair and Equitable distribution under the Resolution Plan - Undoubtedly, the commercial decision and matters pertaining to it solely comes within the ambit of the ‘Committee of Creditors’ who in the present case had approved the Resolution Plan with a majority of 75.70% affirmative votes. In effect, the acceptance and approval of Resolution Plan of 4th Respondent by the ‘Adjudicating Authority’ (National Company Law Tribunal, Kolkata Bench) does not suffer from any vice of material irregularities or patent illegalities in the eye of law, as opined by this Tribunal. - AT
VAT
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Time limitation for imposing penalty u/s 10-A of the Central Sales Tax Act, 1956 - Even though no limitation period as such has been indicated in Section 10-A of the CST Act it does not mean that the Department can decide arbitrarily to invoke to the power thereunder to levy penalty at any time of its choosing. - Considering that the maximum period for reopening an assessment under the CST Act is seven years, and that too in the case of proven fraud, and considering that in this case there is nothing on record to show that the Petitioner indulged in a fraud, the period for which the penalty can be permitted to be imposed cannot exceed three years prior the date of the order imposing penalty. - HC
Case Laws:
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Income Tax
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2022 (1) TMI 126
Reopening of assessment u/s 147 - whether there is tangible material mentioned for reopening the assessment? - profit on sale of surrendered and allotment of new flats and gift of 3G Motors Private Limited shares (Devkinandan J. Gupta) - HELD THAT:- The reasons in this case relate to same issues which we have mentioned earlier on capital gains on exchange of flats and on the gift of shares of 3G Motors Private Limited received by petitioner from his late father - AO in the reasons for the re-opening says that he is of the opinion that there has been escapement of income, on perusal of revised return of income filed, ledger of profit on surrender/allotment of new flats, details filed and submission made by the assessee that the transfer of capital assets has been effected by way of exchange in this case and as per assessees calculations. Therefore, it is clear that the primary facts necessary for assessment were also disclosed. It is settled law that the Assessing Officer is not entitled for change of opinion to commence proceedings for reassessment. It is also settled law that when on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. Notice is hereby quashed - Decided in favour of assessee.
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2022 (1) TMI 125
Rejection of application for Settlement - Validity of order of Settlement Commission Order u/s 245C - Assessment u/s 153A - HELD THAT:- Close reading of the above findings of the Settlement Commission, would reveal that there are many lapses established on the part of the petitioner / assessee in disclosing all the material facts truly and fully. It is not one instance wherein a doubt raised but on several issues the Settlement Commission could able to identify non-disclosure of material facts on the part of the Assessee. Commission made a finding that the Assessee disclosed certain income only after the confrontation with the Department Officials. Certain disclosures are made in piecemeal then and to suit their convenience. This being the conduct of the assessee established before the Settlement Commission and the Settlement Commission also categorically made a finding, this Court has no reason to interfere with such findings as the said findings are candid and convincing and in consonance with the provisions of the Income Tax Act. In view of the fact that the application submitted by the petitioner under Section 254C was rejected as not maintainable in view of the non-compliance of the Mandatory conditions stipulated under the provisions and the petitioner/assessee could not able to establish that he has filed an application with true and full disclosure of facts. Thus, the petitioner is not entitled for any relief as such sought for in the present writ petition.
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2022 (1) TMI 124
Disallowance of deduction of Provision for bad and doubtful debts claimed u/s 36(1)(viia) - HELD THAT:- Provisions of sec.36(1)(viia) does not provide that the shortfall amount can be created as provision in any of the subsequent years. The computation of total income is required to be made for every year and it is determined on the basis of books of account maintained by the assessee for that year. Hence, in our view, the provision made in subsequent year cannot be considered for the purpose of allowing deduction u/s 36(1)(viia) of the Act for the year under consideration - we are of the view that the Ld CIT(A) was justified in directing the AO to allow deduction u/s 36(1)(viia) of the Act to the extent of provision created and debited in the Profit and Loss account. Accordingly, we confirm the order passed by Ld CIT(A) on this issue. Disallowance of bad debts claimed u/s 36(1)(vii) - AO noticed that the above said amount was included in Provisions and Contingencies account - HELD THAT:- We hold that the view expressed by Ld CIT(A) is not legally correct. Accordingly, we set aside the order passed by Ld CIT(A) with regard to his alternative decision, i.e., the view that the proviso to sec. 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also. Accordingly, we direct the AO to delete the disallowance Applicability of provisions of sec. 115JB - case of the assessee is that clause (b) of sec.115JB(2) is made applicable to banking companies, since banking company is included in sec. 211 of the Companies Act - HELD THAT:- We notice that the provisions of sec.51 of the Act specifically states that only certain provisions of BR Act are applicable to Corresponding new bank . We noticed earlier that the Ld CIT(A) has proceeded to decide this issue by observing that all provisions of BR Act are applicable to the Company. We notice that the Ld CIT(A) did not consider the effect of provisions of sec.51 of the BR Act upon the assessee. Hence the decision taken by him under the impression that all the provisions of BR Act are applicable to the assessee is faulted one - CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of banking company , provisions of sec.211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to his file for examining it afresh. Whether Provision for funded interest term loan is liable to be added to net profit u/s 115JB? - HELD THAT:- Since the issue regarding applicability or otherwise of sec.115JB is restored to the file of Ld CIT(A), this issue is also restored to the file of Ld CIT(A) for examining it afresh. Disallowance u/s 14A - HELD THAT:- We are of the view that from the discussion made by the assessing officer in the assessment order, it can be discerned that he was not satisfied with the claim of the assessee. Accordingly he has proceeded to compute the disallowance as per Rule 8D of I T Rules. Accordingly, we are of the view that it cannot be said that the assessing officer has not recorded dissatisfaction. In this view of the matter, we are unable to sustain the decision rendered by Ld CIT(A) on this issue. Accordingly, we reverse the order passed by Ld CIT(A) on this issue. Since he has not decided the issue on merits, we restore this issue to his file to decide the same in accordance with law. Before us, the Ld A.R placed his reliance on the decisions rendered by Hon ble Supreme Court to contend that no disallowance u/s 14A is called for in the case of the assessee. The Ld CIT(A) should consider those decision and should take appropriate decision in accordance with law. Disallowance u/s 40(a)(ia) - ATM usage charges to M/s National Payment Corporation of India (NPCI) without deduction of tax at source as required u/s 194C or 194J or 194H - HELD THAT:- As held that the TDS is not required to be deducted treating as technical service u/s 194J of the Act - CIT(A) also noticed that the Bangalore bench of Tribunal has held in the case of Corporation Bank[ 2015 (3) TMI 1360 - ITAT BANGALORE] that similar kind of payment made cannot be considered as Commission or Brokerage warranting deduction of tax at source u/s 194H of the Act. The Ld CIT(A) held that the above said decision shall apply to the facts of the present case also. He further held that the AO did not specify the section under which the TDS is liable to be deducted by the assessee. Accordingly he deleted the disallowance. We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has rendered his decision following the ratio of decision rendered by Hon ble Supreme Court in the case of Kotak Securities Ltd [ 2016 (3) TMI 1026 - SUPREME COURT ] and also the decision rendered by coordinate bench in the case of Corporation Bank [ 2015 (3) TMI 1360 - ITAT BANGALORE ] Hence we do not find any reason to interfere with his order passed on this issue. Whether the Provision for bad and doubtful debts is not liable to be added to net profit u/s 115JB? - Since the issue of applicability of sec.115JB to the assessee is restored to the file of Ld CIT(A) while considering the appeal of the assessee, we restore this issue also to the file of Ld CIT(A)
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2022 (1) TMI 123
Agricultural income - enhancement made on account of agricultural income - HELD THAT:- Issue decided in favour of assessee [ 2022 (1) TMI 52 - ITAT SURAT] we find no reason to interfere in the said order of the Division Bench, therefore respectfully following the judgment of the Division Bench in assessee s own group cases, we delete the addition made by the Assessing Officer and we also delete the agricultural income enhanced by the ld. CIT(A). We note that in a few group of assessees Assessing Officer made addition as the assessee has travelled/made investment. The Ld. counsel contended that small expenditure incurred for travel and investment etc. were out of the agricultural income. The small cash deposit was made in to bank account out of agriculture income and the said issue has been dealt with by us in assessee s own group cases. Addition on account of unexplained jewellery - No evidence in the form of invoice and the payment made by the assessee were found during the course of search. Further it is submitted that there was no seizure of the jewellery in the course of the search as the jewellery held by the assessee and other family members were within the permissible limit of the CBDT vide Instruction No. 1916 dated 11.05.1994. In such case, no addition can be made.
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2022 (1) TMI 122
Assessment u/s 153A - Transaction towards share capital and share application money by the assessee company from several entities are bogus - HELD THAT:- Since in the instant case, the addition is based on post-search investigations and not based on any incriminating materials found during the course of search in the case of the assessee and since the facts of the instant case are identical to the facts of the case decided by the coordinate Bench of the Tribunal in the case of Moon Beverages Ltd. [ 2020 (12) TMI 256 - ITAT DELHI] therefore, respectfully following the same, we hold that the notice issued for initiation of proceedings u/s. 153A and the assessment framed subsequently are without jurisdiction and deserves to be quashed. - Decided against revenue.
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2022 (1) TMI 121
Penalty u/s.271(1)(c) - disallowance of 54F - HELD THAT:- Assessee challenged the addition in quantum proceedings before the Tribunal. The Tribunal [ 2021 (8) TMI 1266 - ITAT HYDERABAD] set aside the issue to the file of CIT(A) for decision afresh after verification of relevant records. When the addition has been restored to the file of CIT(A), in our considered opinion, the penalty on this aspect should also be restored to the file of CIT(A) for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view in restoring the matter to the file of the CIT(A) is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohammed Mohatram Farooqui [ 2010 (2) TMI 1122 - SUPREME COURT]. We, therefore, overturn the impugned order on this issue and restore the matter to the file of CIT(A). for taking a fresh decision after deciding the matter in quantum proceedings. Accordingly, the grounds raised by the revenue on this issue are allowed for statistical purposes.
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2022 (1) TMI 120
Disallowance of deduction u/s 10A - profits earned by the eligible units in view of the erstwhile provisions of Section 10A(9) - HELD THAT:- In view of the above, we hold that assessee s claim of deduction u/s.10A of the Act would not be hit by the provisions of Section 10A(9) of the Act. We find that in any case, the provisions of Section 10A(9) of the Act is not there for A.Y.2006-07 as it had already been omitted from 01/04/2004. Hence, for the year under consideration, the assessee would be governed by the provisions of Section 10A(1) of the Act. Accordingly, the ground No.1 raised by the assessee is allowed. Disallowance of depreciation on intangibles representing acquisition of business contracts - HELD THAT:- As decided in own case [ 2019 (1) TMI 1128 - ITAT MUMBAI] assessee's claim of depreciation in respect of intangible asset became final. In any case of the matter, there is no dispute that by acquiring M/s. Town and Country Assistance Ltd. the assessee has also acquired contractual rights which, no doubt, is a valuable commercial right. Therefore, it comes within the meaning of intangible asset as per section 32(1)(ii) r/w Explanation 3(b) of the Act. Hence, depreciation claimed by the assessee is allowable. The decisions relied upon by the learned Sr. Counsel for the assessee also supports our aforesaid view. Accordingly, we uphold the decision of the learned Commissioner (Appeals) by dismissing the grounds raised. Adhoc disallowance of professional expenses, electricity charges and miscellaneous expenses - HELD THAT:- We find that this issue is covered by the Circular issued by the CBDT vide Circular No.37/2016 dated 02/11/2016 wherein it has been clarified that disallowance of certain expenses made on account of specific expenditure claimed in respect of eligible unit would only go to enhance the claim of deduction u/s.80IA of the Act. The said analogy would be very much applicable for the claim of deduction u/s.10A of the Act also. It is not in dispute that the aforesaid administrative expenses were incurred by the assessee company only in respect of its eligible units. Hence, there would be no purpose that would be served by making disallowance of certain expenses for want of evidences which were incurred in respect of eligible units. In view of the above, we direct the ld. AO to delete the disallowance of administrative expenses as it would be purely revenue neutral. TP adjustment DRP by computing arm s length price for interest on outstanding receivables - HELD THAT:- As decided in own case [ 2019 (1) TMI 1128 - ITAT MUMBAI] Tribunal while deciding the issue in the order referred to above, has held that the cost incurred by the assessee is purely in the nature of reimbursement without any mark-up. Hence, cannot be treated as part of operating cost. Thus, the Tribunal ultimately upheld the decision of the learned Commissioner (Appeals) on the issue. There being no difference in fact brought to our notice by the learned Departmental Representative in the impugned assessment year, respectfully following the decision of the Tribunal in assessee's own case as referred to above, we uphold the decision of the learned Commissioner (Appeals) on the issue. - Decided in favour of assessee. Disallowance of deduction u/s.10A of the Act in respect of profits earned by the eligible units in view of the erstwhile provisions of Section 10A(9) - HELD THAT:- As decided in own case [ 2016 (3) TMI 24 - ITAT MUMBAI] we hold that assessee s claim of deduction u/s.10A of the Act would not be hit by the provisions of Section 10A(9) of the Act. We find that in any case, the provisions of Section 10A(9) of the Act is not there for A.Y.2006-07 as it had already been omitted from 01/04/2004. Hence, for the year under consideration, the assessee would be governed by the provisions of Section 10A(1) of the Act. Accordingly, the ground raised by the assessee is allowed. TP Adjustment made by the ld. TPO and upheld by the ld. DRP by computing arm s length price for interest on outstanding receivables - HELD THAT:- It is not in dispute that imputing interest cost on outstanding receivables would be construed as an international transaction within the meaning of Section 92B of the Act warranting benchmarking of the same. It is not in dispute that assessee has been making payment of marketing support services to its AEs with enormous delay. It is not in dispute that assessee has been receiving its dues from its two AEs with considerable delay. Hence, it would be just and fair to impute notional interest cost on net outstanding receivables (i.e. trade outstanding receivables from AEs Trade outstanding payables to AEs) and impute interest cost thereon. The interest rate to be adopted thereon would be only LIBOR without any basis points. Hence, the ld. TPO is directed to re-compute the notional interest on net outstanding receivables by applying LIBOR rates and make adjustment to ALP thereon accordingly. Hence, the ground No.12 raised by the assessee is allowed for statistical purposes.
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2022 (1) TMI 119
Addition made on the basis of loose paper impounded during survey u/s 133A - Addition on profit on sale - HELD THAT:- The assessee in the books of accounts declared sales of ₹ 2,31,57,185/- and received advance from customers amounting to ₹ 2,78,85,753/- i.e. total ₹ 5,10,42,398/- against sale of land. Some of the transactions noted in papers did not materialize and thus finalize in subsequent year. Thus, transactions of purchase of land and sales of plots were recorded in books of accounts and these papers are rough papers containing notings, projections and estimates. These calculations are relating to 25% share in sale proceeds, cost of acquisition and other expenses and there was final liability of ₹ 7,48,200/-. We fail to understand that how working of 25% share could be treated as 25% profit. It is noticed that the AO has relied heavily upon the statement of Shri Ramesh Dangayach, Director of the assessee company without bringing on record any corroborative material. Therefore, in view of the above facts and circumstances, we do not find any reason to intervene or deviate from the findings so recorded by the ld. CIT(A) qua this issue and thus we uphold the same and consequently, this ground raised by the Revenue stands dismissed. Expenditure incurred on account of registration - HELD THAT:- We are in agreement with the submission of the ld. A/R that when there was no purchase of land in the year under appeal, then no registration expenses etc. are received to be incurred on account of registration etc by the assessee in the year under appeal. Considering the above facts and circumstances of the case, the addition sustained by the ld. CIT (A) is unwarranted and the same is directed to the deleted. Addition made on the basis of impounded page no. 45 undated - HELD THAT:- The paper neither bears the name of the company nor in the handwriting of any of the Directors/employees. When the sale proceeds have been recorded and accounted for in the books of account then no separate addition on this account can legally be made. It is evident and apparent from the assessment order as well as ld. CIT (A) s order that the impugned addition is made without verifying the fact that who is the buyer and who is the seller of the said plot of land. Thus the addition is completely based on suspicion and having no legal legs. It is a settled position of law that without any supporting legal documentary evidence, no addition can be made on the basis of deaf and dumb notings - considering the totality of facts and circumstances as well as all the relevant facts and notings on the seized paper, we are of the considered view that the impugned addition is made without any supporting documentary evidences and no legs to stand, therefore, we direct to delete the same. Additions on account of alleged transactions of Green City, Agra Road, on the basis of notings on impounded page undated - HELD THAT:- It is a known fact that when any transaction of sale / purchase of land takes place then it is bound to exists certain documents i.e. agreement to sell, purchaser s name, registration of sale deed, payment receipt and other evidences which corroborates the execution of such transaction. It is by the ld. A/R that the seized papers do not bear the name of the assessee company and the transactions are not in the handwriting of any of the Directors or employees of the company and these papers are deaf and dumb documents do not bear the name(s) of sellers/purchasers, area of land, rate per sq. yard etc. and accordingly merely on the basis of some rough notings on the impounded papers, legally no addition can be made to the income of the assessee.Therefore, in our view, the impugned additions have been made on the basis of notings on the seized papers without bringing on record any supporting and corroborative evidences. The additions are made purely on the basis of guess work, estimation which are not sustainable in law. Accordingly we find no merit in sustaining the additions accordingly we direct to delete the same. Addition was made on the basis of estimated profit @ 25% - HELD THAT:- We observed that the addition was made on the basis of rough notings without any supporting documentary evidences which is mandatory for real estate purchase and sale transactions. It is a settled position of law that no addition can be made on the basis of suspicion, surmises and conjectures. We noticed that the notings on the impounded papers are not supported by any other documentary evidences. The paper is undated and having only rough notings, therefore, we are of the considered view that as per law, no addition can be made on suspicion and without any legal supporting evidences and accordingly the addition confirmed by the ld. CIT (A) is deleted. Addition u/s 40(a)(ia) for alleged non-deduction of TDS from payments made to contractors for land development - HELD THAT:- We observed from perusal of the record that the assessee company in case of land development expenses due TDS was deducted at the time of credit / payments made. The proof of payment of TDS is submitted. A.O. made the addition without proper verification from books of accounts of assessee company. It is an important fact that M/s Devi Infra Developers Pvt. Ltd. to whom development expenses paid has filed its return of income including the above said development charges paid by the assessee as its income. A copy of return of income of said company is already attached. Thus even in absence of submitting the declaration on prescribed Form u/s 201(1) of the Act no disallowance of the development charges paid to the said company deserves to be made. See GIRDHARI LAL BARGOTI, [ 2015 (11) TMI 746 - ITAT JAIPUR] - we direct to delete the addition made qua this issue. Addition u/s 68 - HELD THAT:- As observed from perusal of the record that these advances were received from persons who booked plots from company as prospective purchaser of plots. It is submitted that when assessee company gave possession or allotment letter of plot to purchaser the same was shown as sales in books of accounts of company and till then amount received from them has been shown as advance. It is submitted that the complete copy of ledger account is submitted with the A.O. and transactions are verifiable from possession letter or allotment letter and other relevant records of company. Considering the totality of facts and circumstances of the case, we set aside this issue back to the file of the A.O. for verification with regard to the fact that the sales are recorded in books of accounts and the same had been accepted in assessments of company and decide the issue afresh after providing effective and reasonable opportunity of hearing to the assessee in accordance with law. The assessee is at liberty to file any of the documents if it desired for deciding the issue. Addition being an enhancement made by the ld. CIT (A) in the impugned order - HELD THAT:- There is absolutely no material placed by A.O./CIT(A) so as to held that rough jottings/notings which are only estimates, proposals and rough notings prepared by some persons for various proposals, estimates, rough workings in course of business. The revenue has not brought on record any contrary documentary evidence to rebut the claim of the assessee. We noticed that the ld. CIT (A) has taken the entire alleged amount of suppressed sale as income. It is a known fact that the gross sale consideration cannot be taken as income because to determine the profit/income, cost is to be deducted and only the profit on sales can be taken as income. As such, even otherwise the impugned enhancement made by the ld. CIT (A) is grossly wrong and bad in law. As observed from perusal of the impugned order that CIT (A) made the enhancement without giving any opportunity and also he has not brought on record any supporting corroborative evidence for the impugned addition made by him. It is settled position of law that no enhancement can be made without giving an opportunity to the concerned assessee. Further, as held by us in deciding the other grounds of appeal connected to the issue that no corroborative documentary evidence is brought on record by the revenue/ld. CIT (A) and accordingly without supporting evidence the enhancement made by the ld. CIT (A) cannot be sustained. Accordingly, we direct to delete the same.
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2022 (1) TMI 118
Reopening of assessment u/s 147 - AO on the basis of information received from DIT (I CI) reopened the case of the assessee by issuing notice u/s 148 - investment regarding purchase of the property was not disclosed - HELD THAT:- AO has reopened the case after recording the reasons and following due procedure of law. During the appellate proceedings, the assessee raised the ground that notice u/s 148 of the Act has been issued on borrowed satisfaction and notice has not been served on the assessee, therefore, in our view the reopening was done after properly recording the reasons and following the due procedure of law. While examining the reasons for reopening, it is important to see the nature of information rather than the source of information. The assessee has raised the issue that notice was not served on him. It was submitted that notice was issued on old address which has been left by the assessee. We observed from the record that the assessee never informed the AO regarding change of address. The assessee filed the return of income in compliance to notice issued u/s 148 of the Act and also participated in the assessment proceedings. This itself indicates that the notice was received by the assessee - we are of the view that the ld. CIT(A) and passed a speaking order discussing all the facts and circumstances of the case, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A). Hence, we uphold the proceedings with regard to initiation of proceeding U/s 147. Unexplained cash credit u/s 68 of the Act for purchase of property - HELD THAT:- No additions can be made until and unless the evidences filed by the assessee were rebutted and discarded and by bringing any contrary evidences and materials and no addition can be made on the basis of assumption/ presumptions and guess work. Further when the husband of the assessee from the starting has confirmed of giving cash of ₹ 8.50 lacs as he is a regular income tax assessee and all the data given by him were very well available before the AO. Therefore, on the basis of the documents, no addition could be made. If the A.O. was having any doubt regarding the source of cash of ₹ 8.50 lacs by the Shri Naveen Sharma (Husband of the assessee) he could have made the addition in his hands but not in the hands of the assessee. Thus, in view of the above discussion as well as material placed on record, we found merit in the contention of the ld. AR and hence we directed to delete the addition of ₹ 9,00,000/- sustained by the Ld. CIT (A). We order accordingly Appeal of the assessee is partly allowed.
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2022 (1) TMI 117
Capital Gain - Sale of joint property / Land - share of the assessee in sale proceeds - HELD THAT:- We find that when the ITAT remitted the issue to the file of the AO with a direction to decide the issue with verification of the issues pointed out by the ITAT cited supra, the AO accordingly completed the assessment by addressing all the points raised by the ITAT. As per the AO the assessee vide letter dated 03-12-2008 filed in this office on 04-12-2008 has stated that he has received ₹ 11,00,000/- from the purchaser towards sale of Ac. O. 30 guntas situated in Sy.No.139/ AA2, Malkapur village Kondapur mandal, Medak District. The same was pointed out by the ITAT also in para 2 of its order. Accordingly, sale price is considered as ₹ 11 lakh. Vide sale deed No.27230 dated 17-11-2006 executed by the assessee as a vendor, it was mentioned in the document that assessee is executing the said sale deed as a HUF and his share was mentioned as 3/4th and the remaining 1/4th of the share pertains to his son Sri N.Praveen Kumar. Hence the quantum of amount in the hands of the assessee is considered at ₹ 8,25,000/- (3/4th of ₹ 11,00,000/-). While confirming the addition made by the AO, the CIT(A) observed that the AO has duly complied with all the directions of the Hon ble ITAT and has given his findings on each of the four issues after examining all the information filed in the course of assessment proceedings. Therefore, we do not find any infirmity in the order of the CIT(A) and upholding the same, we dismiss the grounds raised by the assessee.
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2022 (1) TMI 116
Revision u/s 263 by CIT - As per CIT AO has failed to carry out proper investigation of the premium money as well as the debentures/shares - assessment was selected under CASS - As per CIT since the debenture carries zero percent interest and premium has been received, which does not need to be repaid, hence, the same represents income which is to be taxed in the year of receipt itself - HELD THAT:- Merely because the assessee issued the CCD, which is hybrid instrument to arrange corporate funding thru group concerns, it does not mean that it has indulged in generation of unaccounted money. In this case, there is no finding by any authorities that the assessee has indulged in such activities except that they received premium in issue of CCDs and recorded the same under the head Reserves and Surplus. As discussed above, the assessee cannot utilize the premium other than the manner specified in section 52 of Companies Act, 2013. There is proper safety and binding specified in the Companies Act to monitor the funds generated by the companies. The tax authorities should apply the provisions selectively rather than on general terms without analyzing the real impact on management of funds and taxability. As discussed assessment was selected under CASS, main object of verification of issue of debentures on premium and low income in comparison to high investment in unlisted equities. In relation to above selection of the case, the Assessing Officer has issued several notices and the assessee has submitted relevant information as called for. The Ld. Pr. CIT considered the above verification and the information submitted by the assessee as improper and non-verification of share premium by the Assessing Officer to assume jurisdiction under section 263 of the Act. The Explanation 2 to section 263 of the Act was invoked by the Ld. Pr. CIT to come to the conclusion that the assessment order is passed without making enquiries or verification. After considering the above facts, in our considered view, the Assessing Officer has made enquiries and carried on with the verification even though passed non-speaking order. The Explanation 2 to section 263 of the Act can be invoked only when no enquiries or verification is carried on otherwise it cannot be invoked. In the given case, the Assessing Officer has carried on the enquiries and verification to his satisfaction which may not be to the satisfaction to the ld. Pr. CIT. Therefore, assumption of jurisdiction fails. See M/S. BRAHMA CENTRE DEVELOPMENT PVT. LTD. [ 2021 (7) TMI 347 - DELHI HIGH COURT] - Decided in favour of assessee.
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Customs
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2022 (1) TMI 115
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - three exporters finding to be non-existent - document to support the allegation that the other exporters existed or not - case of the Revenue is that since these firms were found to be not functioning from the registered premises when physically verified by the Departmental officers, they never existed in the first place and it was the obligation of the appellant as a Customs Broker to verify correctness of Importer Exporter Code (IEC) number - CBIC Circular no. 9/2010-Customs dated 8.4.2010 - HELD THAT:- The Customs Broker is not Omniscient and Omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault does not lie at the doorstep of the Customs Broker and it is not up to the Customs Broker to doubt the documents issued by the authorities and he cannot be faulted for believing them to be correct. As far as the documents issued by various Government officers are concerned the submission of the learned departmental representative is interesting and needs a deeper examination. It is his submission that the documents were neither issued fraudulently nor issued carelessly but were issued within the mandate of the officers who issued them and this mandate does not include physical verification - It is common knowledge that in designing schemes for issuing registrations, certificates or providing incentives, two conflicting objectives of due diligence and facilitation are balanced. Too many checks can make life difficult for the exporter or the citizen and too much facilitation can open the doors for frauds. Determining the golden mean and where to draw the line is a matter of public policy. The extent of liberalization or tightening may also vary greatly from one system to another and that is also a matter of public policy. The entire system of exports is based heavily on trust and facilitation and very less emphasis on due diligence which enhances trade facilitation but also makes it vulnerable to misuse by fraudsters. The IEC is issued by DGFT based only on an online application and a few easy to obtain documents. So, one cannot rule out the possibility of an IEC being issued without the person even operating its business from the address. The IEC forms the foundation for the entire system of controls and, in turn, is the basis for issue of various licences and scrips by the DGFT and is also the basis for Customs allowing exports. In view of the customs RMS letting 80% to 95% of the exports without either assessing the documents or examining the records, there is a very high probability of any fraudster successfully exporting the goods (or even empty containers) and claiming the export incentives and profiting from it. Both the financial gain to an individual and the aggregate financial impact on the budget are large but the policy and schemes are not designed mainly to facilitate the good guys and genuine exporters and not to keep the crooks out - Just as the officer s responsibility ends with doing his part of the job (which may be issuing a registration without physical verification or allowing exports without assessing the documents or examining the goods), the Customs Broker s responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. In dispute in this case is CBLR 10(n) which, as we have discussed above, does not require any physical verification of the address of the exporter/importer and the appellant has fully met his obligations under Regulation 10(n). The only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which is not true - in the factual matrix of the case and evidence available on record, the Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018. Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 114
Rejection of request for provisional release of the seized goods - high end wrist watches - prohibited goods or not - Section 110A of the Customs Act - HELD THAT:- Discretion is cast upon the adjudicating authority under section 110A of the Customs Act while deciding an application filed for provisional release of the goods and in P. PANDITHURAI VERSUS THE JOINT COMMISSIONER OF CUSTOMS (ADJUDICATION) , O/O. THE COMMISSIONER OF CUSTOMS, TRICHY s[ 2020 (3) TMI 859 - MADRAS HIGH COURT ], the Madras High Court observed that such discretion must be exercised in a manner known to law and that an opportunity of being heard is also required to be given. In the present case, a search had been carried out at the residential premises of the employees of M/s. Johnson Watch Co. Pvt. Ltd. on 29.10.2012 and also at its various showrooms and the residence of its Directors on 29.10.2012 and 30.10.2012. Details of the high-end wrist watches recovered from the residence of Pushpak Lakhani, Shikha Pahwa, Pankaj Lakhani, Purushottam Jajodia and the Directors and showrooms of M/s. Johnson Watch Co. Pvt. Ltd., have been mentioned in paragraphs 5 and 6 of this order. It is seen that while 95 high-end wrist watches were recovered from the appellant, about 6233 high-end wrist watches were recovered from M/s. Johnson Watch Co. Pvt. Ltd., 5 high-end wrist watches were recovered from Purushottam Jajodia and 16 high-end wrist watches were recovered from Pankaj Lakhani. The Principal Commissioner also committed an error in rejecting the application filed by the appellant for provisional release of the goods by holding that the seized goods were prohibited goods liable for confiscation under section 110(d) of the Customs Act. As noticed above, the watches of all other co-noticee were released by the Department and this issue has been raised by the Department only in the case of the appellant. Even while adjudicating the show cause notice issued to M/s. Johnson Watch Co. Pvt. Ltd., by order dated 27.05.2020, only a fine has been imposed under section 125(1) of the Customs Act and the goods have not been confiscated. The Delhi High Court had also in Its My Name held that both prohibited and non-prohibited goods can be released under section 110A of the Customs Act. The view taken by the Principal Commissioner for rejecting the application filed by the appellant for provisional release of the goods for the reason that a discretion is vested in the authority and since the subsequent show cause notice dated 27.10.2017, was adjudicated upon and the appellant was held liable to penalty, also suffers from an error - In the present case, the appellant had not only deposited a substantial amount of duty proposed in the show cause notice but had also made an offer to deposit the remaining amount under protest so that the goods could be released provisionally. It has also been found as the fact that the 6233 high- end wrist watches recovered from M/s. Johnson Watch Co. Pvt. Ltd. were released merely on the basis of an undertaking given by the Directors in 2012 without even moving any application for provisional release of the goods. Not only that, 5 high-end wrist watches recovered from Purushottam Jajodia and 16 high-end wrist watches recovered from Pankaj Lakhani were also released pursuant to the orders passed by the Supreme Court and it is only in the matter of the appellant that relates to 95 high-end wrist watches and ₹ 61 Lakhs in cash that the application for provisional release of the goods has been rejected. It would be appropriate to direct that, subject to the appellant depositing the remaining balance amount of duty proposed in the show cause notice within a period of 30 days from the date of this order, the goods and the cash seized from the appellant should be released within the next 30 days - Appeal allowed.
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2022 (1) TMI 113
Filing of Export Obligation Discharge Certificate - EPCG Authorisation Scheme - failure to produce such Export Obligation Discharge Certificate (EODC) before the proper officer within the prescribed time limit - HELD THAT:- The appellant has received redemption letter for the aforementioned EPCG authorisation, being redemption letter no.05/34/021/00187/AM08 dated 23.10.2019 issued by the office of the Additional Director General of Foreign Trade, New Delhi. The appellant approached the office of the ld. Commissioner (Appeals) by letter dated 2.12.2019, annexing the copy of the Export Obligation Discharge Certificate, but the same could not be considered, as the appeal has already been dismissed earlier. Accordingly, the appellant have filed the present appeal. As the EODC has been issued in the meantime, the dispute no longer exists. EODC categorically states that the appellant have met in full their export obligations - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (1) TMI 112
Reduction in the share capital - Section 66(1) of the Companies Act, 2013 - HELD THAT:- The present position of law, while dealing with the provisions of Section 66 (Old Sections 100-104 of Companies Act, 1956) is that if none of the shareholders are objecting for the proposed reduction, then after considering the merits of the case as also connected facts and circumstances such petition normally deserves to be admitted. In the case of ELPRO INTERNATIONAL LTD., IN RE [ 2007 (6) TMI 292 - HIGH COURT OF BOMBAY ], Hon'ble Bombay High Court has expressed that the question of reduction of share capital is the matter of domestic concern. Further observed that decision for reduction is based on commercial consideration undertaken by the businessmen who are in the best position to know of the necessities and interests of the company concerned, in the absence of serious allegations as regards the bona fides of the proposed Scheme, the Courts are of the view that no interference in such decisions are acquired. It has also been observed that considering the commercial aspect of the decision it is not permissible for the Court to come to the conclusion that the exit opportunity offered is inequitable and unjust. It is ordered to confirm the reduction of share capital of Petitioner Company by approving the minutes of the EOGM - the scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (1) TMI 111
Maintainability of suit considering the bar contained in Section 33(5) of the IBC, 2016 - Liquidation proceedings - Seeking a summary judgment against the 1st Defendant Vessel - Defendants having no real prospect of successfully defending the claim of the Applicant/Plaintiff - principles of res-judicata - Penal Berth Hire charges - penal charges or not - HELD THAT:- An action in rem is not against the Corporate Debtor but against the Vessel. The Vessel is a distinct juridical entity and the action proceeds without reference to the owner who is not a party to the suit when filed. Liquidation of the Corporate Debtor does not affect the ownership of the res so as to defeat a maritime claim in respect of the Vessel. The res continues to be in the ownership of the Corporate Debtor and the Liquidator merely acts as a custodian. The status of the res does not change. Hence, the action in rem can be entertained even at the stage of liquidation of the Corporate Debtor as the claim is against the res and not against the Corporate Debtor - by not permitting the action in rem and arrest of the Vessel, the rights in rem given to a maritime claimant under the Admiralty Act would be defeated and denied. The entire purpose of these rights (whether a maritime lien or a maritime claim) is to enable such a claimant to have his claim perfected in law by arrest of the Vessel. If a claimant is not permitted to do so, then his right in rem may stand extinguished and be lost forever. Principles of res judicata - HELD THAT:- The principles of res judicata would apply when the matter in issue in a previously instituted suit is directly and substantially in issue in the subsequent suit between the same parties, or between the parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court. In other words, for the subsequent suit to be barred by the principles of res judicata, the matter directly and substantially in issue in the subsequent suit (i) has been directly and substantially in issue in the former suit; (ii) must be between the same parties, or between the parties under whom they or any of them claim, litigating under the same title; and (iii) the former suit has been heard and finally decided on merits. What follows therefrom is that the principles of res judicata would not apply if (a) there is no decision on merits; or (b) if it is between different parties. Considering that the claim made in the present suit is not against Defendant No.2 at all but against the sale proceeds of the 1st Defendant Vessel and which continues to be an action in rem, any adjudication done by Defendant No.2 regarding a claim made by the Plaintiff against Defendant No.2, cannot attract the principles of res judicata qua the present suit, which is seeking a decree only against the 1st Defendant Vessel - the claim in the present suit is not barred by the principles of res judicata. Levy of Penal Berth Hire charges - penal in nature or not - HELD THAT:- The 1st Defendant Vessel agreed to pay these charges when it engaged the services of the Plaintiff Port. Once the 1st Defendant Vessel contractually agreed to pay these additional charges, Defendant No.2, as the Liquidator of Tag Offshore Ltd. (the owner of the 1st Defendant Vessel), cannot resile from this contractual obligation on the specious ground that Penal Berth Hire charges are really nothing but a penalty and will therefore have to be proved. These charges are nothing but additional charges in the event the contingencies mentioned above are triggered - Penal Berth Hire charges are not a penalty that would be required to be proved by the Plaintiff before it can seek to recover these charges. When Defendant No.2 stated that as far as the berth/port charges are concerned there is no dispute it meant that it included all Berth charges/Port Charges including Penal Berth Hire charges - Mr. Arsiwala s contention that the Plaintiff is not entitled to any amount towards Penal Berth Hire charges, cannot be argued with. This argument, therefore, stands rejected. There will also be a decree in favour of the Plaintiff and only against the sale proceeds of the 1st Defendant Vessel for interest @ 18% per annum on the said sum of ₹ 5,51,00,016/- from 18th December 2020 till payment and/or realization. For the reasons recorded earlier, the claim towards Salvage operations is not granted at this stage and will have to be proved at the trial of the suit - The Plaintiff shall, along with their claim for Salvage operations, also be entitled to agitate their claim for interest prior to 18th December 2020, and legal costs, at the trial of the suit. Application disposed off.
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2022 (1) TMI 110
Validity of Resolution Plan - Fair and Equitable distribution under the Resolution Plan - compliance with the ingredients of Section 30 of the I B Code or not - HELD THAT:- It is brought to the fore that in the 11th Meeting of the Committee of Creditors held 24..04.2019 the decided to accord approval to the Resolution Plan furnished by M/s Jagannath Financial Advisory Pvt. Ltd. Because of the fact that the required period for CIRP was to come to an end, the Committee of Creditors had turned down the contentions of the Appellant and approved the Resolution Plan in its meeting that took place on 21.05.2019. In short, the distribution of Resolution Fund was decided as (a) Canara Bank- 24-30% (b) North Eastern Development Financial Corporation- 47.77% (c) Punjab National Bank 27.93% - Although, the Appellant/Canara Bank gave a dissenting Vote for the approval of the Plan, based on the reason that Distribution of Resolution Fund was discriminatory as against them and despite its plea that it was entitled to the equal and share in regard to the distribution of the Resolution Fund on the footing that the Bank held more than 80% of the assents of the Corporate Debtor as security, the fact of the matter is that the Committee of Creditors had approved the Resolution Plan of Jagannth Financial Advisory Pvt. Ltd by 75.70% of votes. It cannot be gainsaid that the Resolution Fund was equally distributed among all the Financial Creditors showring them equal share i.e., 23.43 % and that the 1st Respondent/Resolution Professional had certified the plan and the compliance certificate was furnished. There is no illegality in the Resolution Plan as opined by this Tribunal, it comes to be known that the Successful Resolution Applicant/Respondent No. 4 had implemented the Resolution Plan in part and made part payments quite in tune with the Approved Resolution Plan . The distribution of the amount between the Creditors provide the equal treatment to all of them. Also that the Appellant was provided with a fair value as per decision of the Committee of Creditors and the value proportionate to the dues was allotted same as that of other Financial Creditors - Undoubtedly, the commercial decision and matters pertaining to it solely comes within the ambit of the Committee of Creditors who in the present case had approved the Resolution Plan with a majority of 75.70% affirmative votes. In effect, the acceptance and approval of Resolution Plan of 4th Respondent/M/s Jagannath Financial and Advisory Pvt. Ltd. by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) does not suffer from any vice of material irregularities or patent illegalities in the eye of law, as opined by this Tribunal. Appeal dismissed.
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2022 (1) TMI 109
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has filed the list of purchase orders, invoices and the proof of dispatch of the same to the Corporate Debtor. Also the Operational Creditor has filed the email confirmation dated 15.11.2019 issued on behalf of the Corporate Debtor acknowledging their dues. Further, it is seen that the Corporate Debtor even after receipt of the Invoices have not raised any dispute in relation to the services provided by the Operational Creditor, however has failed to pay the sum to the Operational Creditor which is due and payable. Thus, the Operational Creditor has proved that there is an 'operational debt' and 'default' which has been committed on the part of the Corporate Debtor. Further, it is also pertinent to note that the default arising in the present Application is much prior to the advent of the Covid-19 pandemic and hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. The Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016 - Petition admitted - moratorium declared.
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2022 (1) TMI 108
Liquidation proceedings - Priority of payment of dues - seeking direction to 2nd and 3rd Respondent to pay the Applicant his dues as per the proportion for employees and workmen as stated in the Resolution Plan - HELD THAT:- It has been made abundantly clear that the Resolution Applicant can be made liable for the dues which are forming part of the Information Memorandum and once the Resolution Plan is approved by this Adjudicating Authority, all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. In the present case, the dues of the Applicant do not form part of the Information Memorandum as admitted claim and the RP has rejected the claim of the Applicant - Application dismissed.
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2022 (1) TMI 107
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of notice - time limitation - HELD THAT:- The Demand Notice under Section 8 of the IBC, 2016 was sent by the Operational Creditor on 25.07.2018 to which the Corporate Debtor replied on 21.08.2018, which is beyond 10 days as given under Section 8 of the IBC, 2016. The Corporate Debtor through email admitted the claim of ₹ 2,94,208/- stating that the balance outstanding amount is the deduction for the loss and damage caused to the Corporate Debtor. However, the Corporate Debtor raised dispute when the Demand Notice was sent by the Operational Creditor. The Corporate Debtor accepted and admitted the dues for an amount of ₹ 1,94,208/- (Rupees one lakh ninety four thousand two hundred and eight). Hence, the claim of the Operational Creditor is accepted admitted by the Corporate Debtor. The default amount meets the threshold limit as per Section 4 of the IB Code, 2016 and is well within the limitation for filing the present application. It is clear that Corporate Debtor has defaulted in the payment of its debts. On the basis of the facts the application is otherwise defect free on record - Application admitted - moratorium declared.
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CST, VAT & Sales Tax
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2022 (1) TMI 106
Time limitation for imposing penalty u/s 10-A of the Central Sales Tax Act, 1956 - maximum period for reopening of an assessment under the CST Act - principal grounds of challenge is that the period of seventeen years could have been clubbed together for imposing penalty on the Petitioner - HELD THAT:- While on a plain reading, Section 10A does not stipulate a period of limitation for exercise of the power to impose penalty thereunder, it is obvious that the said power has to be exercised within a reasonable time. In the present case the period for which the penalty is sought to be imposed is as long as seventeen years i.e. from 22nd October, 1975 to 30th June, 1992. Clearly the legislative intent was not to empower the Department to levy penalty in one go for a period of seventeen continuous years. Such an interpretation would render the power unreasonable and arbitrary. Even though no limitation period as such has been indicated in Section 10-A of the CST Act it does not mean that the Department can decide arbitrarily to invoke to the power thereunder to levy penalty at any time of its choosing. In the light of the law that such power must be exercised within a reasonable time, the impugned order seeking to levy penalty in one go for a period of 17 years is unsustainable in law - Considering that the maximum period for reopening an assessment under the CST Act is seven years, and that too in the case of proven fraud, and considering that in this case there is nothing on record to show that the Petitioner indulged in a fraud, the period for which the penalty can be permitted to be imposed cannot exceed three years prior the date of the order imposing penalty. A direction is issued to the Opposite Parties to rework the penalty amount on pro rata basis by restricting the period to three years prior to the date of the impugned order of penalty i.e. from 1st July 1989 to 30th June, 1992 - Petition disposed off.
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2022 (1) TMI 105
Seeking tax concession/relief pursuant to the order of the Board for Industrial and Financial Reconstruction (BIFR) - HELD THAT:- Since this Court had already taken a view in the order dated 15th January, 2014 that PPL should go before the BIFR for all incidental or ancillary reliefs it was seeking in respect of the Scheme from which it stands discharged by virtue of the above order dated 6th September, 2011, the Court considers it appropriate to reiterate that observation and direct that the NCLT, before whom the application filed by PPL on 18th June, 2014 is currently pending, should proceed with the hearing of the said application in accordance with law. The Court therefore refrains from issuing any direction or making any observation on the plea urged by PPL in the present petition and leaves it open to the PPL to urge all the pleas raised here vis- -vis the sanctioned Scheme passed in BIFR Case No.238 of 2003 before the NCLT. It must be noted here that in the present case, on 18th December, 2019, an interim order was passed to the effect that no coercive action would be taken against the Petitioner pursuant to the notice of assessment which had been permitted to be proceeded with by the Court on 8th December, 2014 with the direction that no final order would be passed in those proceedings. The net effect is that there is an interim protection in favour of the Petitioner preventing any coercive action being taken against it - this Court further directs that the interim order dated 18th December, 2019 will continue till such time the NCLT issues appropriate interim directions in the matter at the request of any of the parties. Writ petition disposed off.
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2022 (1) TMI 104
Jurisdiction - power of Sales Tax Officer to impose penalty u/s 9-B(3) of the O.S.T. Act, 1947 - absence of any delegation of power by the Commissioner of Sales Tax after substitution of Section 9-B(3) with effect from 12.3.1983 - penalty u/s on the ground that the Petitioner s application for summoning witnesses was not entertained by the STO - HELD THAT:- In the present case, as noted by the Tribunal in the impugned order, the Tribunal at the outset noticed that in terms of the latest circular / notification, the STO has been delegated with the power to impose penalty under Section 9-B(3) of the OST Act not exceeding two times only of the tax so realized. It is also noticed by the Tribunal that, the power to impose penalty exceeding two times of the tax lies only with the Commissioner. However, in the present case the STO proposed to impose penalty not exceeding two times the tax. This was not to be disputed in the Tribunal by the counsel for the Petitioner. Consequently, as per the Circular in force, the STO did not exceed his jurisdiction in initiating the penalty proceeding. The question framed by this Court by the order dated 10th January, 2007 is answered with the affirmative, i.e. in favour of the Department and against the Petitioner assessee by holding that the STO was within jurisdiction in imposing the penalty, since the proposed penalty did not exceed twice the tax involved - Petition dismissed.
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2022 (1) TMI 103
Reopening of assessment - initiation of proceedings under Section 12 (8) of the Orissa Sales Tax Act, 1947 - sales tax concession on purchase of raw materials and sale of finished product under IPR-92 and in terms of Entry-42 of the exemption list as per the Finance Department Notification dated 23rd September, 1992 - HELD THAT:- The reason given for the reopening of the assessment for the year 1998-99 also does not stand scrutiny. The Petitioner has been merely informed that it is the same reason as per 1997-98 when in fact it could not have been. The basis for the claim of exemption for 1998-99 was in terms of Entry 44-A of the F.D. Notification dated 26th July 1996, which in fact permitted 100% exemption from sales tax. The decision in Vadilal Chemicals Ltd. [ 2005 (8) TMI 121 - SUPREME COURT ] is instructive in this regard. In similar circumstances in that case, the Supreme Court disapproved the approach of the sales tax authorities seeking to override the exemption granted by the Department of Industries and Commerce. It was held that the Deputy Commissioner of Commercial Taxes (DCCT) certainly could not assume that the exemption was wrongly granted nor did he have the jurisdiction under Section 20 of the State Act to go behind the eligibility certificate and embark upon a fresh enquiry with regard to the appellant's eligibility for the grant of the benefits. As the eligibility certificates were issued by the Department of Industries and Commerce and could not be cancelled by the Sales Tax Authorities - Petition allowed.
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Indian Laws
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2022 (1) TMI 102
Dishonor of Cheque - petitioners are the Directors of the first accused company - vicarious liability of Directors in the company - Section 141 of the Negotiable Instruments Act - HELD THAT:- It is settled law that there is no vicarious liability in criminal jurisprudence, unless the Statue makes them vicariously liable for the offence committed by the company. When the offence is committed by the company, merely because some persons are directors of the company, they cannot be roped into and make them liable for the offence committed by the company - Section 141 of the Negotiable Instruments Act, provides that when the company committed any offence, every person who, at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. By virtue of the legal fiction created under Section 141 of the Act, every person who are all in charge of and responsible for the day to day affairs of the company are deemed to have committed the offence - a basic averment has to be made in the complaint, which is an essential requirement under Section 141 of the Negotiable Instruments Act. In the absence of any such specific averment in the complaint merely because the petitioners are being the directors of the company, they cannot be made liable for offence under Section 141 of the Negotiable Instruments Act. There is no specific averment in the complaint to the effect that the petitioners who are all the directors of the company are in charge of and responsible for the conduct of the business of the company. Merely saying that they are directly involved in the affairs of the company is not sufficient. Being a director of the company, he may be involved in the affairs of the company as attending the meeting of the Board of Directors, guiding the company in administrative and policy matters. But, that itself is not sufficient to hold that they are in charge of and responsible to the day to day affairs and the conduct of the business of the company - the Judicial Magistrate is expected to consider all the materials available before him and on due application of mind form an opinion that a prima facie case is made out in respect of an offence, then only the learned Judicial Magistrate can proceed further and issue process against the accused. The averment made in the complaint is not sufficient to fix criminal liability against the petitioners and the learned Magistrate without considering the same has taken cognizance of the offence against the petitioners and has issued summons to them - petition allowed.
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2022 (1) TMI 101
Dishonor of Cheque - Insufficient funds - benefit of presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt or not - sufficient evidences present or not - HELD THAT:- In the case in hand the rebuttal circumstances taken up by the defence is not even consistent enough to rebut the initial presumption drawn in favour of the appellant /complainant. The case of the appellant/complainant is not improbable in the absence of a consistent defence. The accused did not challenge the financial capability of the appellant /complainant to lend the cheque amount as loan. The complainant s denial about his partnership with Royal Finance is of no consequence to the accused, when the accused himself has given confusing statement about his transactions with Royal Finance. Though the learned trial Judge had appreciated this difference in the given time of the respective transactions and other circumstances, the learned Appellate Judge omitted to do so. Though the learned Sessions Judge had applied the right principle of law, that is not applicable to the facts and evidences available in the present case. This Criminal Appeal is allowed.
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2022 (1) TMI 100
Dishonor of Cheque - insufficient funds - legally enforceable debt or not - acquittal of the accused - appellant collecting interest at 24% with monthly compounding, is correct or not - HELD THAT:- The account statement produced as Ext.P10 would clearly indicate that every month interest was being added to the principal and the interest for the next month was calculated on the entire amount, including the previous arrears and the interest already added during the previous month. This method of computation is completely different from imposing penal interest upon an installment amount which contain interest element. There are no doubt that the method of computation adopted by the appellant herein is amounting to compounding of interest. In such circumstances, the finding of the trial court cannot be interfered with. As rightly found by the trial court, none of the documents produced in support of the case of the appellant provide for compounding interest to be collected from the accused person. Even as per the Ext.P11 promissory note and also as per the evidence of PW1 what was permissible is interest at the rate of 24% per annum. However, the cheque amount which tallies the final figure as shown in Ext.P10 account statement includes interest at compounding rates which was not authorised even as per the evidence adduced by the appellant himself. In such circumstances, the amount specified in Ext.P1 cheque cannot be treated as a legally enforceable debt so as to attract offence under Section 138 of Negotiable Instruments Act. Appeal dismissed - decided against appellant.
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2022 (1) TMI 99
Dishonor of Cheque - existence of the legally enforceable debt or not - rebuttal of presumption under Section 139 as well as Section 118 of the Negotiable Instruments Act - HELD THAT:- Once it is proved that a negotiable instrument has been executed and handed over to the payee thereof the presumption as contemplated under the aforesaid provision comes into play. Unless the said presumption is rebutted by the accused by adducing some evidence, the court has to proceed on the basis of existence of a legal liability towards the complainant. In this case, the defence put forward by the 1st respondent is that the cheque which was collected by the appellant as part of the chitty transaction at an earlier point of time and it was later misused by the appellant by entering figures therein - the exact figure may not find a place in those statements as the amount mentioned in Ext.P2 cheque is the aggregate of the total arrears. In the light of presumption under Section 139 of the Negotiable Instruments Act, the appellant is entitled to succeed. In this case, the 1st respondent could not make out any case by adducing any evidence or otherwise to rebut the presumption available in favour of the appellant. In the light of the presumption under Section 139 which stands unrebutted and also the supporting materials in the form of Exts.P8 and P9 series, it is found that the cheque was issued in discharge of a legal liability towards the appellant herein - legal requirements for attracting the offence under Section 138 of the Negotiable Instruments Act regarding the issuance of notice and timeline to be followed before initiating the proceedings are seen duly complied with. The offence under Section 138 of the Negotiable Instruments Act is clearly established and the finding entered into by the Judicial First Class Magistrate Court-IV, Punalur contrary to the same is liable to be set aside - Appeal allowed - decided in favor of appellant.
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