Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 24, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS liability u/s 195 - Income accrued in India - Commission paid to the non-resident in the present case is not taxable under the IT Act by virtue of Section 5(2) read with Section 9(1)(vii)(b), there is no scope for finding any liability on the resident company to deduct tax from source, from payments made by them to the non-resident.- HC
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Income accrued in India - consideration received by the assessee for sale of software cannot be treated as royalty under the provision of section 9(1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA and that the sale of software products by the assessee to its Indian distributors for further sale to end users is not in the nature of transfer of “copyright” and therefore not taxable in the hands of the assessee as “royalty” - AT
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TP Adjustment - MAM selection - TNMM or RPM - It is not the case that assessee has resold the same goods with only minor modifications to justify the adoption of RPM as the most appropriate method. In the present case the assessee has assembled the goods partly purchased from its associated enterprise and partly developed by its own vendor. - transactional net margin method is the most appropriate method - AT
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Disallowance of Personal Expenditure - It is well settled law that ad hoc addition cannot be sustained unless AO has pointed out any specific item in which personal element is involved. There was thus, no justification to make any disallowance out of these expenditures. - AT
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Addition u/s 56(2)(viib) - allegation of Share premium received by assessee was in excess of Fair Market Value of shares - Method of valuation - AO can scrutinize the valuation report only if some arithmetical mistakes are found, he may make necessary adjustments. It is not open for the AO to challenge or change the method of valuation, once opted by the assessee and to modify the figures as per his own whims and fancies. - AT
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Late fee u/s 234E - Late filing of TDS returns / statement - the delay in filing of statement is to be counted from the date of payment of TDS because before the payment of TDS, the quarterly statement cannot be filed and if we compute the delay in this manner, the delay is of 12 days only - AT
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Exemption u/s 54F - Denial of exemption possession of the property was not taken by assessee and registered sale deed was not executed in favour of assessee - assessee has substantially fulfilled all necessary conditions to be entitled for liberal interpretation of sec.54F. - AT
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Disallowance of Business Promotion and Social Welfare Expenses - Maintaining a cordial relations with the Police Department and District Administration is in the interest of business of the assessee and hence the said payment of the assessee for the welfare of the Police Department, particularly Community Centre as well as Welfare Fund of the Police Department is an allowable expenditure having regard to the nature of business activity in the mining field which requires police help for maintaining law and order situation and uninterrupted functions of the assessee. - AT
Indian Laws
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Dishonor of Cheque - section 138 of NI Act - sale of land under Coercion - Void Agreement/ Illegal Consideration - The contention that agreements was void is already rejected. Apart from that, Section 65 of the Indian Contract Act binds him to refund the money received. The said section bars the accused from making unjust enrichment - HC
IBC
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IBC - Liquidation order - Termination on PPA - keeping in view the objective of the Insolvency and Bankruptcy Code, 2016 which relates to maximization of the value of assets for resolution of the corporate person, it stands to reason that the Solar Power Plant i.e. physical assets realizes its full economic value only if it functions in conjunction with the PPA. The steady and assured revenue stream resulting from the existence of the PPA is the sine’ qua non for the long-term economic and financial viability of the solar power project since it provides comfort and security to the financial creditors who feel encouraged to provide credit for the project. - AT
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Direction to set aside the Order of the Liquidator rejecting the ‘Claim’ of the Appellant - no ‘Charge’ has been registered under the provisions of Section 77(1) of the Companies Act 2013, in relation to the Subject Property. The Liquidator has rightly referred to Regulation 21 of IBBI (Liquidation Process) Regulation, 2016 and observed that the Appellants ‘Claim’ was not supported by any evidence as prescribed under the said Regulation. - AT
Case Laws:
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GST
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2020 (10) TMI 951
Profiteering - vires of Section 171(3) of CGST Act and Chapter XV of the CGST Rules specifically Rules 126, 127 and 133 of GST Rules - HELD THAT:- Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (6) TMI 626 - DELHI HIGH COURT ] as well as M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 526 - DELHI HIGH COURT ] and M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 614 - DELHI HIGH COURT ] , this Court directs the petitioner to deposit the balance principal profiteered amount i.e. ₹ 25,15,392/- (₹ 55,60,340/- minus ₹ 2,64,778/- minus ₹ 27,80,170/-) with the State Consumer Welfare Fund in six equated monthly installments commencing 02nd November, 2020. - The interest amount directed to be paid by the respondents as well as the penalty proceedings are stayed till further orders. Learned counsel for the parties are directed to file their short written submissions not exceeding three pages each at least one week prior to the next date of hearing. List on 21st December, 2020.
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2020 (10) TMI 950
Stay on the operation of direction under Rule 133(4) of the CGST Rules - HELD THAT:- The direction under Rule 133(4) of the CGST Rules given in the impugned order dated 07th July, 2020 to the respondent no.3 to undertake further investigation and the notice dated 09 th October, 2020 as well as summons dated 25th September, 2020 are stayed till further orders. Accordingly, the application stands disposed of.
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2020 (10) TMI 949
Refund of IGST - Export of Service with payment of IGST - rejection of refund due to non submission of BRC or Foreign Inward Remittance Certificates, required in case of Export of Services as per rule 89(2) (c) of the CGST Rules, 2017 - HELD THAT:- As per Rule 89(2) (c) of the CGST Rules, 2017, a Statement containing the number and date of invoices and the relevant Bank Realization Certificate or Foreign Inward Remittance Certificates, as the case may be is required, in a case where the refund is on account of the export of services - Further, Board has clarified the issue vide Para -12 and 14.2 of Circular No. 37/11/2018-GST dated 15.03.2018 stating that insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon. In the instant case, the appellant has submitted a copy of Foreign Inward Remittance Statement issued by the ICICI Bank alongwith a copy of export Invoice No. 01 dated 18.08.2017 raised by the appellant. But no where in the statement details of invoice i.e. the number and date is mentioned vide which the statement can be co-related with the export of service made by the appellant. In the absence of the details of invoice in the statement it can not be ascertained that it pertains to the particular invoice. Hence, it can not be treated a valid FIRC (Foreign Inward Remittance Statement) which is required as per rule 89(2) (c) of CGST Rules, 2017. Appeal dismissed.
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2020 (10) TMI 948
Revocation of cancellation of registration - due to non submission of reply to the show cause notice within the time specified - HELD THAT:- Central Board of Indirect Taxes Customs, New Delhi has clarified the issue vide circular No.99/18/2019-GST dated 23.04.2019 that where the registration has been cancelled with effect from the date of order of cancellation of registration, all returns due till the date of such cancellation are required to be furnished before the application for revocation can be filed. Further, in such cases, in terms of the second proviso to sub-rule (1) of rule 23 of the said Rules, all returns required to be furnished in respect of the period from the date of order of cancellation till the date of order of revocation of cancellation of registration have to be furnished within a period of thirty days from the date of the order of revocation. The appellant is required to follow the procedure as prescribed under rule 23 of the CGST Rules,2017 as clarified vide circular No. No.99/18/2019-GST dated 23.04.2019 and to approach the adjudicating authority for further necessary action according to said rules/circular. Appeal disposed off.
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2020 (10) TMI 947
Revocation of cancellation of registration - due to non submission of reply to the show cause notice within the time specified - HELD THAT:- Central Board of Indirect Taxes Customs, New Delhi has clarified the issue vide circular No.99/18/2019-GST dated 23.04.2019 that where the registration has been cancelled with effect from the date of order of cancellation of registration, all returns due till the date of such cancellation are required to be furnished before the application for revocation can be filed. Further, in such cases, in terms of the second proviso to sub-rule (1) of rule 23 of the said Rules, all returns required to be furnished in respect of the period from the date of order of cancellation till the date of order of revocation of cancellation of registration have to be furnished within a period of thirty days from the date of the order of revocation. The appellant is required to follow the procedure as prescribed under rule 23 of the CGST Rules,2017 as clarified vide circular No. No.99/18/2019-GST dated 23.04.2019 and to approach the adjudicating authority for further necessary action according to said rules/circular. Appeal disposed off.
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2020 (10) TMI 946
Refund of accumulated credit - Inverted Duty Rate structure - the adjudicating authority has held that the Tax Structure on major Input used and Final Product manufactured is same @ 5% (except some consumables items), therefore, the accumulated input tax credit appeared not to be on account of Inverted tax structure and dis-allowed the refund - HELD THAT:- Refund of unutilized ITC in case of inverted tax structure, as provided in Section 54(3) of the CGST Act, 2017 is available where ITC remains unutilized even after setting off of available ITC for the payment of output tax liability. Where there are multiple inputs attracting different rate of tax, in the formula provided in Rule 89(5) of the CGST Rules, the term Net ITC cover the ITC availed on all inputs in the relevant period, irrespective of their rate of tax - Further, Para -14 of Circular No.79/53/2018-GST dated 31.12.2018 clarified that both the law and the related rules clearly prevent the refund of tax paid on input services and capital goods as part of refund of input tax credit accumulated on account of inverted duty structure. Since the appellant has taken Input Tax Credit on the Input, namely Vanaspati and Cooking Oils, Packing material, Input Services related to job work and Capital Goods etc., which attracts different rates of GST Further - as per CGST Act and Rules clearly prohibit the refund of tax paid on input services and capital goods as part of refund of input tax credit accumulated on account of inverted duty structure. There are no force in the contention of the appellant and the reliance placed by the appellant in their defence is not applicable in this case. The adjudicating authority has rightly passed the order and appellant is not entitled for refund of unutilized input tax credit. Therefore, the appeal is rejected to that extent. Re-credit of the amount of ₹ 1,07,18,285/- in Electronic Credit Ledger of the appellant - Rule 93 of the CGST Rules. 2017 - HELD THAT:- The appellant may approach the adjudicating authority and follow the procedure as laid down under Rule 93 of CGST Rules. 2017. Appeal disposed off.
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2020 (10) TMI 901
Validity of Garnishee Notice - principles of natural justice - violative of Articles 14 and 19(1)(g) and 265 of Constitution of India or not - HELD THAT:- As seen from the record, prima facie, it appears that even before the statutory period of limitation for filing an appeal has expired, garnishee notice dated 26.08.2020 came to be passed for recovery of tax for the period from January, 2020 to June, 2020; January, 2019 to December, 2019. It is to be noted here that against the assessment order dated 13.08.2020, an appeal lies under section 117 of the central Goods and Service tax Act and the time prescribed for filing the appeal is three months. Even before the expiry of the said period, the Garnishee notice came to be passed. Insofar as the period of recovery from January, 2019 to December, 2019 is concerned, it appears form the record that notice was given on 28.07.2020 intimating the discrepancies in the Returns after scrutiny and the petitioner has to furnish reasons for the discrepancies on or before 27.08.2020. but, though the time expires on 27.08.2020 garnishee Notice came to be passed on 26.08.2020. List the matter on 02.09.2020.
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Income Tax
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2020 (10) TMI 945
Revision u/s 263 - AO failing to provide the draft assessment order in terms of Section 144C(1) of the said Act to the Assessee, had violated the principles of natural justice and, therefore, the assessment order dated 18/12/2009, was erroneous and deserved to be set aside. whether the assessment order dated 18/12/2009 in this case, is void ab initio or not? - HELD THAT:- Going by the decisions of Control Risk India (P.) Ltd. [ 2018 (7) TMI 892 - SC ORDER] ; International Air Transport Association; Lionbridge Technologies (P.) Ltd. [ 2018 (12) TMI 764 - BOMBAY HIGH COURT] and Vijay Television (P.) Ltd. [ 2014 (6) TMI 540 - MADRAS HIGH COURT] , we have to hold that the assessment order dated 18/12/2009, in the present case, was clearly without jurisdiction and, therefore, null and void or void ab initio. The fact that the Assessee, in this case, may have not instituted a Writ Petition to challenge the same, but has instituted only an appeal challenging the same, can make no difference to the legal position which is otherwise quite clear. This was not a case where the assessee was merely throwing some collateral challenge to the assessment order dated 18/12/2009. The assessee had frontally challenged this order by instituting an appeal against the same. Therefore, all these decisions could not have been ignored by the ITAT by merely observing that these were the decisions in Writ Petitions instituted by the Assessees. - Decided in favour of assessee.
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2020 (10) TMI 944
Reopening of assessment - Penalty u/s 271AAC - unexplained income u/s 69 (A) - petitioner, argues that the order passed is cryptic in nature as also the Officer has not assigned any reason for carrying out re-assessment in the case of the petitioner - HELD THAT:- We are of the considered view that all material facts necessary for adjudication were recorded and considered by the Officer and as such the order cannot be said to be in violation of principles of natural justice, even though it may be short in nature. Since disputed questions of fact are raised before us, we refrain from adjudicating the same, reserving liberty to the petitioner to prefer a statutory appeal which is an equally efficacious remedy. As such, present petition stands disposed of. At this stage, learned counsel for the petitioner submits that limitation may not come in the way of adjudication of the appeal.
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2020 (10) TMI 943
Revision u/s 263 - Pre-Operative Expenses as per Schedule-6 to the audited Profit Loss Account is not covered by Section 35D and the expenses are required to be capitalised with the block of depreciable assets - HELD THAT:- Whether it was an income, taxable or not or whether it was an expenditure, to be capitalised or not, are entirely two different fields and therefore, both the authorities appear to have proceeded on a wholly wrong premise or under a confusion in the matter. These orders have been passed in a casual manner without proper enquiry into the facts by both the fact finding authorities. Therefore, in our opinion, the matter deserves to be remanded back to CIT for passing fresh orders, in accordance with law, under Section 263 of the Act, after giving a reasonable and adequate opportunity of hearing to the Assessee. Appeal of the Revenue is allowed without answering the question of law raised in the matter by setting aside the order as restored on the file of the learned Commissioner of Income Tax - I, Coimbatore, for deciding the proceedings under Section 263 of the Act afresh
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2020 (10) TMI 942
Deduction u/s 80IB-8A - Whether Tribunal is right in law in holding that the conditions of Rule 18DA(8A) can be looked into only by the prescribed authority and not by the AO as conditions necessary for allowing deduction u/s 80IB-8A - whether the AO is well within his jurisdiction to accept or reject the same based on the conformity adhered to by the assessee? - HELD THAT:- Once the approval is granted by prescribed authority and such approval is valid, it would be no longer be open to the Assessing Officer to verify the satisfaction of the conditions prescribed under Rule 18DA in order to refuse deduction under Sub-Section (8A) of Section 80-IB of the Act. Tribunal, in the instant case, has examined the issue on merits and has held that Rules clearly contemplate even sponsored research program and the entire receipts of the assessee are from contract research and not of own research. Any issue with regard to violation of conditions mentioned in Rule 18DA can be looked into only by the prescribed authority and therefore, the Assessing Officer erred in disallowing the deduction. Tribunal has rightly held that issue with regard to violation of conditions mentioned in Rule 18DA can be looked into only by the prescribed authority and not by the AO. Admittedly, the approval was granted to the assessee, which was renewed from time to time, therefore, the question of remand does not arise in the facts of the case. We are in respectful agreement with the view taken in case of B.A.RESEARCH INDIA LTD [ 2016 (6) TMI 853 - GUJARAT HIGH COURT] - Decided against revenue.
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2020 (10) TMI 941
Income accrued in India - commission paid to the non-resident - whether services of the non-resident do not fall under the scope of 'technical services' as spoken of in Section 9(1)(vii)? - TDS u/s 195 - HELD THAT:- There is an element of managerial function coupled with all encompassing consultancy services and also purely technical services too. The appellant cannot raise a contention that the services of the non-resident do not fall under the scope of 'technical services' as spoken of in Section 9(1)(vii) and defined in Explanation-2. Activities carried out by the commission agent, who is a non-resident, to be covered under the exception to clause (b) of Section 9(1)(vii) - The commission, as is seen from Annexure-B, is 15% of the contracts/projects executed by the appellant on the basis of the marketing services rendered by the commission agent. The income derived by the appellant from the marketing services rendered by the commission agent is sourced from the three territories which are outside India. The activities of the non-resident agent are confined to those territories outside India - commission paid is 'fees payable in respect of services for the purposes of making or earning any income from any source outside India' is the compelling argument, which we find favour with. The income derived by the appellant is un-disputedly from the three territories mentioned in the agreement, which are admittedly outside India. There is no utilization of the services rendered by the non-resident agent within India. The projects executed by the resident company even within India was for sale to the foreign buyer and it cannot be said that merely for reason of the execution in India the service was utilized in India. The software developed in India was also for export; the appellant being a 100% EOU. The services rendered by the non-resident agent was for facilitating sale in the three outside territories. The services rendered for effecting exports by the appellant company to foreign buyers, makes the foreign countries the source of income. The execution of the project within India would not attract income tax since the income is derived from the sale of the product outside the territories of India and the execution is only to obtain such income from territories outside India. As has been declared in Sedco Forex International Drill Inc. [ 2005 (11) TMI 25 - SUPREME COURT] an explanation to a statutory provision may fulfill the purpose of clearing up an ambiguity in the main provision or an explanation can add to and widen the scope of the main section . The Explanation cannot be found to have taken away or curtailed the effect of the clear exceptions provided by sub-clause (b) of Section 9(1)(vii). Commission paid to the non-resident in the present case is not taxable under the IT Act by virtue of Section 5(2) read with Section 9(1)(vii)(b), there is no scope for finding any liability on the resident company to deduct tax from source, from payments made by them to the non-resident. We rely on GE India Technology Centre [ 2010 (9) TMI 7 - SUPREME COURT] wherein it was categorically held that the plain words of Section 195(1) which is in clear terms lays down that tax at source is deductible only from 'sums chargeable' under the provisions under the IT Act, i.e., chargeable under Sections 4, 5 and 9 of the IT Act (sic. para 24). In favour of the assessee and against the Revenue.
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2020 (10) TMI 940
Stay petition - petitioner/assessee has paid a sum nearly 25% of demand - whether the petitioner/assessee has made out a prima facie case for grant of interim orders? - HELD THAT:- When the assessee was unsuccessful before the lower forums for the second time, obviously this would be a factum, which would work against the assessee, while deciding a prima facie case. Infact, the Tribunal in the impugned order, has not foreclosed the assessee's / petitioner's case and it has made an observation that in the appeal, a detailed examination of the orders of the High Court of Delhi and other material has to be made and also, it is required to be examined, whether the interest payment was incurred for business purpose of the assessee or not. There is no perversity or erroneous approach on the part of the Tribunal in not granting an interim order sought for by the assessee. When the Tribunal has failed to exercise its discretion in granting an interim order, the High Court while testing the correctness of the said order, would consider as to whether there was any perversity in the approach of the Tribunal for the High Court to interfere by substituting its opinion. Present proceedings is not an appellate proceedings over and above the order passed by the Tribunal. Infact, the assessee has chosen to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. The limits to which this jurisdiction can be extended, especially in taxation matters, are well defined. Thus, in the absence of any perversity in the impugned order, we are not inclined to interfere with the impugned order. Since the petitioner/assessee appears to have been ready for the disposal of the appeal and the matter has been adjourned at the instance of the Revenue, We give liberty to the petitioner/assessee to move the Tribunal with a prayer for early hearing of the appeal and if such prayer is made, subject to the convenience of the Tribunal, the petitioner/assessee can be given a hearing at an earlier date.
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2020 (10) TMI 939
Penalty levied u/s 271(1)(c) - Defective notice - non strike down inapplicable portion - incorrect computation of book profit u/s 115JB - HELD THAT:- Incorrect computation of book profit has happened due to erroneous filling up of data in the return of income. The same is a bonafide and inadvertent error. In the case of Price waterhouse coopers P Ltd [ 2012 (9) TMI 775 - SUPREME COURT] considered the validity of penalty levied on bona fide mistakes imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars. In our view, the decision of Hon ble Supreme Court would come to the help of the assessee in the facts and circumstances of the case. Accordingly, we hold that the imposition of penalty on the assessee is not justified. Appeal of the assessee is allowed.
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2020 (10) TMI 938
Disallowance u/s. 14A r.w.r. 8D - interest on partners capital treated as exempt for the purpose of making disallowance or not? - assessee is claiming that there are no borrowed funds and no expenditure can be directly attributed to earn the exempt income and the AO has not recorded his satisfaction for not accepting the assessee s claim - HELD THAT:- Respectfully following the decision of ITAT Pune in the case of Quality Industries [ 2016 (10) TMI 56 - ITAT PUNE] we hold that payment of interest to the partners towards the use of the partner s capital as per the provisions of partnership deed is held not subject to disallowance under section 14A read with Rule 8D(ii). Interest is simultaneously be subjected to tax in the hands of its partners is merely in the nature of contract items in the hands of the firms-partners. Therefore, the investment in Mutual funds by the assessee generating tax free income bears the characteristic of and is attributable to its capital where, no disallowance u/s.14A r.w Rule 8D(ii) is warranted. Disallowance u/r 8D(iii) - no specific ground or plea has been taken by the ld A.R. on behalf of the assessee, therefore, we hold it sustainable in view of express mandate of law - Keeping in view the facts related to the remaining issue of mandatory disallowance u/s.14A r.w. Rule 8D(2)(iii), we are consistently following the view expressed in the case of NALCO [ 2019 (10) TMI 124 - ITAT CUTTACK] wherein as held average of only such investments have to be taken into account, which yielded the income not forming part of the total income. AO was required to work out the average of such investment, the income from which did not form part of the total income instead of total value of investment. For this view, our stand is fortified by the decision of Special Bench in the case of ACIT vs. Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI]. We, therefore, restore the issue to the file of the AO for limited purpose i.e. for calculation of the disallowance u/s.14A r.w. Rule 8D(2)(iii) of the Rules, in the light of our conclusions recorded hereinabove.
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2020 (10) TMI 937
Application u/s 80G(5)(vi) rejected - charitable activity u/s 2(15) - assessee has been granted registration u/s 12AA - HELD THAT:- From the registration granted u/s 12AA that objects of the assessee were charitable in nature and assessee has been doing some activities. On the last date of hearing the CIT(E) called for certain explanation and details with regard to activities which according to Assessee have been sent vide letter dated 27.12.2017 through email on 29.12.2017. CIT(E) has passed the impugned order prior to it on 28.12.2017. Thus, it would show that assessee was interested in pursuing the matter and there was no justification for the Ld. CIT(E) to hold that assessee is not interested in pursuing the matter. Copy of the email of the O/o. Ld. CIT(E) dated 22.12.2017 is filed at page-128 of the PB in which even no date have been given for making the compliance. There were no justification to pass the impugned order on 28.12.2017 before waiting for the reply of the assessee which assessee has ultimately filed on 29.12.2017. The facts clearly show that the matter requires re-consideration at the level of the CIT(E) because the documentary evidence or record have not been considered and appreciated by him. In view of the above discussion, we set aside the impugned order. Appeal of the Assessee is allowed for statistical purposes.
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2020 (10) TMI 936
Income accrued in India - taxability of receipts from the sale of software as royalty - receipts of royalty income being in nature of payment for use of copyright in a process and transfer of information of commercial or industrial nature - Copyright vs Copyrighted Article - India-Sweden DTAA - HELD THAT:-Since the facts of the instant assessment year are identical to the facts of the two preceding assessment years decided by the Tribunal in assessee s own case relying on INFRASOFT LTD. [ 2013 (11) TMI 1382 - DELHI HIGH COURT] and NOKIA NETWORKS OY [ 2012 (9) TMI 409 - DELHI HIGH COURT] we set aside the order of the Ld. CIT(A) and hold that consideration received by the assessee for sale of software cannot be treated as royalty under the provision of section 9(1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA and that the sale of software products by the assessee to its Indian distributors for further sale to end users is not in the nature of transfer of copyright and therefore not taxable in the hands of the assessee as royalty under the provision of section 9 (1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA. - Decided in favour of assessee.
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2020 (10) TMI 935
Penalty u/s 271D and 271E - loans were taken and repayment were made in cash, thereby violating the provisions of section 269SS and 269T - HELD THAT:- Majority of loans / deposits are taken from relatives, viz., wife, son and daughters. Bangalore Tribunal in the case of Smt.Deepika v. Addl.CIT [ 2017 (10) TMI 1405 - ITAT BANGALORE] had held that transactions between family members would not attract penalty u/s 271D. Also in the case of Sunil Kumar Goel [ 2009 (3) TMI 131 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that the family transactions would fall within the meaning of reasonable cause u/s 273B. Loans / deposits accepted from other than relatives, viz., Sri.Hiren Kumar Patel - On a query from the Bench whether there is a business understanding in writing between the assessee and Sri.Hiren Kumar Patel, the learned AR submitted in the affirmative and requested the matter may be examined by the A.O - For the imposition of penalty u/s 271D and 271E in context of transaction the assessee had with Sri.Hiren Kumar Patel, the matter is restored to the A.O. The assessee shall cooperate with the A.O. and shall not seek unnecessary adjournment. The assessee shall prove his case that the transaction he had with Sri.Hiren Kumar Patel is a business transaction and not a loan / deposit. It is ordered accordingly. Cash paid by Sri.Hiren Kumar Patel to a builder for the purchase of a flat on behalf of the assessee - passing of journal entry without actual receipt of cash - HELD THAT:- Assessee had recorded in her books of account, by passing a journal entry by crediting Sri.Hiren Kumar Patel s accounts and debiting the flat purchase account. However, only the ledger account of Sri.Hiren Kumar Patel in the books of account of the assessee alone is placed on record. To understand whether it is a journal entry, the ledger account of the developer in the books of account of the assessee also needs to be perused. In absence of the same, in the interest of justice, we restore the issue to the files of the A.O. The A.O. shall examine whether the assessee in her books of account only passed a journal entry and was not in receipt of money from Sri.Hiren Kumar Patel. In view of the dictum laid down by the Hon ble Delhi High Court in the case of CIT v. Noida Toll Bridge Co. Ltd. [ 2003 (1) TMI 46 - DELHI HIGH COURT] if the assessee had passed only a journal entry, the provisions of section 269SS would not be attracted and penalty u/s 271D.
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2020 (10) TMI 934
Dependent Agent PE of the assessee company in India - Income accrued in India - HELD THAT:- Since the lower authorities following the orders of the preceding years [ 2020 (9) TMI 922 - ITAT DELHI ] have held that M/s. Mitsui Co. Ltd. has been constituted as Dependent Agent PE of the assessee company in India , therefore, following the consistent decisions of the Tribunal in assessee s own case in the preceding assessment years and in absence of any contrary material brought to our notice against the decision of the Tribunal we hold that MIPL is not a Dependent Agency Permanent Establishment of the assessee. No attribution of income should be made to MIPL Attribution of profits to DAPE [Dependent Agency Permanent Establishment]- HELD THAT:- Respectfully following the consistent decisions of the Tribunal in assessee s own case [ 2020 (9) TMI 922 - ITAT DELHI ] also relying decision of the preceding assessment years [ 2020 (2) TMI 1053 - ITAT DELHI ] and in absence of any contrary material brought to our notice we hold that no further profit could be attributed since assessee is not a Dependent Agency Permanent Establishment. Commission on the total sale - CIT(A) deleted the addition made by the AO observing that TPO has accepted the payment being at arm s length - HELD THAT:- We do not find any infirmity in the order of the Ld. CIT(A) on this issue. First of all this issue becomes academic in nature in view of our finding that MIPL is not dependent agency PE and therefore no income is attributable to the assessee and therefore when there is no income there is no question on any disallowance - such commission claimed by the assessee has been accepted in earlier years by the Ld. CIT(A) and the revenue had not preferred any appeal although they had filed appeal against the order on other issues decided by the Ld. CIT(A) in favour of the assessee. Merit in the arguments advanced by the Ld. Counsel for the assessee that once the department has accepted the view taken by the Ld. CIT(A) in the preceding years the said view cannot be disputed in the current year in view of the principles of rule of consistency.
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2020 (10) TMI 933
TP Adjustment - MAM selection - TNMM or RPM - TPO computing the arm length price in respect of Import of Material and Export of finished goods by applying Transactional Net Margin Method and rejecting resale Price Method as the most appropriate method, thereby making a TP adjustment - HELD THAT:- In the present case before us the issue is whether the assessee is a distributor or a manufacturer and whether resale price method is applicable to the international transactions entered into by the assessee. It is not the case that assessee has resold the same goods with only minor modifications to justify the adoption of RPM as the most appropriate method. In the present case the assessee has assembled the goods partly purchased from its associated enterprise and partly developed by its own vendor. Therefore, the decision relied upon by the learned authorised representative MSS INDIA (P) LIMITED. [ 2009 (5) TMI 600 - ITAT PUNE-A] does not help the case of the assessee. In view of the above facts we do not find any infirmity in the order of the learned assessing officer/transfer pricing officer as well as the direction of the learned dispute resolution panel in rejecting the resale price method adopted by the assessee and adopting transactional net margin method as the most appropriate method. - Decided against assessee.
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2020 (10) TMI 932
Penalty u/s 271(1)(c) - defective notice - AO has not specified under which limb penalty is being initiated - HELD THAT:- Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty u/s 271(1)(c) was sought to be imposed on it in the SCN , dated 10.11.2014, had left the assessee guessing of the default for which it was being proceeded against. As the two defaults viz. concealment of income and furnishing of inaccurate particulars of income as contemplated in Sec.271(1)(c) are separate and distinct defaults which operate in their exclusive and independent fields, we, are unable to subscribe to the view taken by the CIT(A) that the A.O had validly imposed penalty for concealment of income/filing inaccurate particulars of income in respect of the aforesaid addition/disallowance made in the hands of the assessee. We not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set aside the order of the CIT(A) who had upheld the same. The penalty imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. - Decided in favour of assessee.
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2020 (10) TMI 931
TDS u/s 195 - Non deduction of TDS on subscription charges - demand raised u/s 201(1) and 201(1A) - as per AO payment so made by the assessee for getting the license to use data base of M/s Gartner group is in the nature of royalty - HELD THAT:- As decided in M/S. ACER INDIA PRIVATE LTD. case [ 2020 (10) TMI 450 - ITAT BANGALORE] assessee cannot be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] . Accordingly, the demand raised in the hands of the assessee u/s 201(1) and 201(1A) for assessment years 2009-10 to 2011-12 could not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 could also not be sustained. - Decided in favour of assessee.
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2020 (10) TMI 930
Disallowance u/s 14A r.w.r. 8D - recording satisfaction - assessee s objection that there is absence of satisfaction recorded by the Assessing Officer - HELD THAT:- We note that the AO has categorically stated that Hence, having regard to the accounts of the assessee-company, I am satisfied that the claim of the assessee in respect of expenditure in relation to income which does not form part of the total income under the Income Tax Act, 1961 is not correct. Plea that the AO has not recorded any satisfaction regarding assessee s claim fails and in this view of the matter the case laws referred by assessee for the proposition that the disallowance in this regard on the touchstone of Rule 8D would fails in the absence of necessary satisfaction by the AO are not applicable, in as much as satisfaction of the AO is very much evident in the assessment order. Accordingly, this limb of claim of assessee s argument is not correct. We note that the exempt income earned is only ₹ 3,99,270/- and the disallowance for administrative expenses incurred in this regard is ₹ 2,36,733/-. This at glance is not in accordance with principles of proportionality. Hence, we remit this issue to the file of the AO with the direction to assessee to submit its details of direct and indirect expenses which has been incurred in incurring exempt income. Addition being the interest income reflected in the AIR information not credited in the profit and loss account - HELD THAT:- Contention of assessee is that the said income did not belong to the assessee and it was mistake on the part of IL FS Securities Ltd. to show the above sum as income of the assessee was not made before the AO nor the assessee had asked the Assessing Officer to issue/make any inquiry from the concerned entity. Hence matter is remitted to the file of the Assessing Officer. AO is directed to examine the assessee s plea that the said income reflected in AIR information is wrong in as much as some does not belong to the assessee. Disallowance u/s 36(l)(ii) - Payment of bonus to its directors shareholders - HELD THAT:- AO in this case if he wants to invoke provisions of section 36(1)(ii) on the touchstone of M/S. DALAL BROACHA STOCK BROKING PVT. LTD. [ 2011 (6) TMI 251 - ITAT, MUMBAI]. AO will have to give clear cut finding as to what was tax avoidance or tax evasion involved in this case. For this purpose the AO will need to examine the amount of dividend which the assessee-company would have declared under the provisions of relevant payment of dividend as per the Company s Act. He shall also compute tax sought to be avoided by the assessee company by the so called scheme of the company. In this regard the decision in the case of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] is also relevant here as expounded that if the tax effect is revenue neutral, the proposition need not be disturbed. Here Assessing Officer shall examine the assessee s submission that both the share holder directors or owners of the company have filed their individual return and have been taxed at the highest bracket in the context of this Hon'ble Supreme Court decision. So the tax impact and the emerging tax neutrality if any, needs to be evaluated on the touchstone of this decision also. The claim in this regard was duly submitted, as noted by learned CIT(A) himself in his order. Accordingly, we set aside the issue of allowability of payment of bonus to the director shareholders in accordance with our direction and the decisions quoted above
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2020 (10) TMI 929
Disallowance u/s 14A r.w.r. 8D - Non recording of satisfaction before making disallowance - HELD THAT:- As decided in own case AO [ 2019 (4) TMI 1436 - ITAT DELHI] at the first instance should have examined the correctness of the statement made by the assessee that no expenses were incurred for earning the exempt income during the year and if and only if the Ld. AO is not satisfied on this account after making reference to the accounts, he is entitled to adopt the method under Rule 8D of the Rules. We, therefore, while allowing the plea of the assessee direct AO to delete the addition made on this score. Interest on Car Loans - AO held that income and expenditure account of the assessee for the year under consideration, it was seen that the assessee has debited interest paid on account of vehicle loan - HELD THAT:- As decided in own case [ 2019 (4) TMI 1436 - ITAT DELHI] it is not the case of the Ld. Assessing Officer that the car loan was diverted for any other purpose, because there is no denial of the statement of the assessee that the loan amount was directly disbursed to the seller of the car. Inasmuch as the loan was for the purpose of business and no question of diversion of such funds had taken place, merely because the assessee placed his own funds and also the interest free loans for some other purposes, is not open for the Ld. Assessing Officer to disallow the interest on the amount taken for business purpose. We, therefore, direct the Assessing Officer to delete this addition. Software Expenses - AO has disallowed the claim of the assessee of treating software expenses as revenue expenses and treated it as capital expenditure and depreciation @ 60 % was allowed and 40% of the expenses were disallowed on account of software expenses being capital in nature - HELD THAT:- The issue of depreciation of the software and the computer accessories has been adjudicated a number of cases by this Tribunal wherein depreciation @60 % has been allowed - since the AO and the ld. CIT ( A) have categorically mentioned that the assessee did not produce the relevant evidences for the purchase of software, we, accordingly, set aside the orders of the authorities below and restore this issue to the file of AO with direction to re-decide the issue after giving an opportunity of being heard to the assessee, after verifying the bills and vouchers produced on this issue. This ground is allowed for statistical purposes. Disallowance of Personal Expenditure - AO noted that assessee has claimed telephone and telex, vehicle running and maintenance expenses and depreciation on vehicle in profit and loss account - HELD THAT:- We are of the view that the entire addition is wholly unjustified. The AO has not pointed out on which items personal element was involved in claiming the aforesaid expenses. AO has not pointed out any specific item which is used by the assessee for personal purposes. It is ad hoc addition made by the AO by disallowing 1/10th out of these expenditures. It is well settled law that ad hoc addition cannot be sustained unless AO has pointed out any specific item in which personal element is involved. There was thus, no justification to make any disallowance out of these expenditures. We, accordingly, set aside the orders of the authorities below and delete the entire addition. Appeal of the assessee is allowed
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2020 (10) TMI 928
Addition u/s 56(2)(viib) - allegation of Share premium received by assessee was in excess of Fair Market Value of shares - Method of valuation - adopting the prescribed method at the choice of the assessee or revenue - HELD THAT:- Once the assessee has produced all the valuation reports based on Discounted Free Cash Flow method as well as the fair market value of the assets as on the date of issue of the shares, then this observation of the ld. CIT (A) that the assessee has failed to exercise an option of adopting the method is contrary to the record. Despite the fact that all the valuations are available on record, the ld. CIT (A) has again failed to give the credit to the extent of the valuation being the fair market value of the shares based on Net Assets Value method at least. Failure on the part of the ld. CIT (A) to allow the credit to the extent of the fair market value even based on the Net Assets Value method, it appears that the ld. CIT (A) was not functioning as an independent appellate authority but reflecting as an authority to collect the maximum revenue. Accordingly, in the facts and circumstances of the case when the assessee has substantiated the value of the shares issued at a price of ₹ 200/- by a fair market value of ₹ 230/- which is more than the issue price, then no addition is called for under section 56(2)(viib) As decided in M/S. RAMESHWARAM STRONG GLASS (P) LTD. VERSUS THE ITO, WARD 2 (1) , AJMER [ 2018 (9) TMI 403 - ITAT JAIPUR] Authorities below wanted to impose upon the method of valuation of their own choice, completely disregarding the legislative intent which has given an option to the assessee to choose any one of the two methods of valuation of his choice. When the law has specifically provided a method of valuation and the assessee exercised an option by choosing a particular method (DCF here), changing the method or adopting a different method would be beyond the powers of the revenue authorities. Permitting the revenue to do so will render the clause (b) of Rule. 11UA(2) as nugatory and purposeless. Thus, to this extent the action of the authorities below is not justified and it is held that the assessee has got all the right to choose a method which, cannot be changed by the AO. AO can scrutinize the valuation report only if some arithmetical mistakes are found, he may make necessary adjustments. It is not open for the AO to challenge or change the method of valuation, once opted by the assessee and to modify the figures as per his own whims and fancies. In any case, the revenue could not ask to prepare the valuation report based on actual which is not contemplated in Rule 11UA(2)(b) - Decided in favour of assessee.
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2020 (10) TMI 927
Extension of stay granted - grant stay beyond 365 days - HELD THAT:- Payments made by the assessee is already much in excess of 20% of the disputed demand of tax, interest, fee, penalty, etc., and in this manner, the amended first proviso to section 254(2A) gets satisfied in the present case. In view of the above discussion, we grant extension of stay up to 19.03.2021 in order to ensure that the total stay granted by the Tribunal does not exceed 365 days because the original stay was granted by the Tribunal on 20.03.2020. We do not mean and hold that the Tribunal cannot grant stay beyond 365 days but that aspect we are leaving open for a decision in some other appropriate case because in the present case, even by granting extension of stay up to 19.03.2021, total stay granted by the Tribunal does not exceed 365 days and therefore, in the present case, we feel that we are not required to adjudicate this aspect of the matter i.e. amended second proviso to section 254 (2A). Stay Petitions filed by the assessee are allowed.
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2020 (10) TMI 926
Late fee u/s 234E - intimation u/s 200A - Late filing of TDS returns / statement - dispute is regarding filing of Form 26Q and therefore, sub-rule 1 is applicable and not sub-rule 4A - HELD THAT:- As relying on Meghna Gupta [ 2018 (10) TMI 355 - ITAT DELHI] this is the observation of the Tribunal that fees under section 234E is leviable only when the statement is not filed as prescribed u/s 200(3) which in turn provides that the statement is to be filed after payment of the TDS to the prescribed authorities. In the present case, the TDS was deposited on 21.10.2015 and the actual date of filing of Form 26Q is 02.11.2015 and hence, as per this Tribunal order, the delay in filing of statement is to be counted from the date of payment of TDS because before the payment of TDS, the quarterly statement cannot be filed and if we compute the delay in this manner, the delay is of 12 days only as per the working provided by the assessee on page 5 of the Paper Book. Accordingly, we uphold the levy of fees under section 234E to this extent i.e., ₹ 2,400/- and delete the balance amount of fees levied by the AO and confirmed by learned CIT(A) under section 234E of the Income Tax Act, 1961.
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2020 (10) TMI 925
Exemption u/s 54F - Denial of exemption possession of the property was not taken by assessee and registered sale deed was not executed in favour of assessee - CIT(A) allowed exemption claimed by assessee to the extent as deposited into capital gains account scheme maintained with Indian overseas bank and state bank of India and disallowed exemption claimed in respect of investment made in residential property by holding that, investment in residential property was made prior to date of sale of original asset, and construction of residential property was not completed within stipulated time - HELD THAT:- There is no strict requirement regarding completion of construction under section 54F(1) to be entitled for availing exemption. The passport to derive benefit under sec.54F(1) is investment in construction of property within the period required u/s 54(1)F or to invest in residential property within the stipulated time for enabling deduction under section 54F. Once it is demonstrated that the consideration received on transfer of capital asset has been invested in or construction of residential house, even though the construction is not complete in all respect as required under law, assessee cannot be denied benefit under section 54F. Further on a plain reading of case of CIT Vs. Sambandam [ 2012 (3) TMI 80 - KARNATAKA HIGH COURT] reveals that, there is no particular stage of completion of construction, that is contemplated. AR submitted that, the construction was later on completed and the sale deed was registered in favour of assessee on 05/07/2019 in respect of transfer of ownership of residential property. There is nothing placed by revenue on record to demonstrate any other violation in support of their arguments. In present facts we are of the view that assessee has substantially fulfilled all necessary conditions to be entitled for liberal interpretation of sec.54F. We hold that assessee is eligible for exemption u/s 54F. - Decided in favour of assessee.
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2020 (10) TMI 924
TP Adjustment - adjustment to arm s length price in respect of AMP expenditure - whether Advertising, Marketing and Promotion (AMP) expenditure could be construed as an international transaction? - HELD THAT:- As decided in own case [ 2016 (8) TMI 608 - ITAT MUMBAI] AMP expenditure is not an international transaction and hence, no ALP adjustment could be made thereon. Unabsorbed depreciation carried forward and adjusted in view of Section 32(2) - HELD THAT:- Issue decided in favour of the assessee by the decision of General Motors India Pvt. Ltd. [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] . Also in case of Times Guarantee Ltd.[ 2010 (6) TMI 516 - ITAT, MUMBAI] on identical issue, by placing reliance on the decision of CIT vs. Hindustan Unilever Pvt. Ltd. [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] and several other Bombay High Court decisions, had dismissed the claim of the revenue - Decided in favour of assessee.
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2020 (10) TMI 923
Addition u/s 56 (2)(vii)(b) - difference in purchase consideration between sub-registrar value and purchase price - difference between fair market value of the property and actual consideration - whether the third proviso to section 50C(1) can be applied to section 56(2)(vii)(b) in the absence of such proviso in that section? - HELD THAT:- Parliament has introduced third proviso in section 50C(1) of the Act, as per which the difference in stamp duty valuation and actual consideration should be ignored, if it is less than 5%/10%. Even though the said provision has come into effect from 1.4.2019/1.4.2021, we notice that the Kolkata Bench of Tribunal has held it to be curative in nature in the case of Chandra Prakash Jhunjhunwala [ 2019 (8) TMI 1192 - ITAT KOLKATA] and accordingly held that the proviso shall apply since the date of insertion of sec.50C of the Act. Accordingly, the above said reasoning given by the Kolkata bench of ITAT also supports the contentions of the assessee. We find merit in the prayer of the assessee. We notice that the addition sustained by Ld CIT(A) works out to less than 10% of the actual consideration paid by the assessee. Accordingly, we modify the order passed by Ld. CIT(A) and direct the A.O. to ignore the difference between fair market value determined by CIT(A) and the actual consideration as the same is less than 10% of the actual consideration. - Decided in favour of assessee.
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2020 (10) TMI 922
Disallowance of prior period expenses - reasons for claiming these expenses one by one under each head which has been reproduced by the AO in the assessment order - whether expenditures are crystallized during the year under consideration? - HELD THAT:- When the liability is crystallized during the year under consideration and the assessee has been regularly and consistently following the same method of accounting and system of approval of the payments, then the claim of expenditures would not affect the tax liability of the assessee. Accordingly, in the facts and circumstances of the case and following the earlier order of this Tribunal, the disallowance made by the AO and sustained by the ld. CIT(A) is deleted. Disallowance of Business Promotion and Social Welfare Expenses - payments made to Federation of Mining Association of Rajasthan, District Police Welfare Fund, District Weight Lifting Association, West Zone Culture Centre, District Vikas Samiti for construction of Community Centre for Police Department, Rose Society, Sangeet Parishad, Mahila Samiti, Government Adarsh Higher Primary School - AO has disallowed the said amount on the ground that these expenses are in the nature of donation and not incurred for the purpose of business of the assessee - HELD THAT:- Maintaining a cordial relations with the Police Department and District Administration is in the interest of business of the assessee and hence the said payment of the assessee for the welfare of the Police Department, particularly Community Centre as well as Welfare Fund of the Police Department is an allowable expenditure having regard to the nature of business activity in the mining field which requires police help for maintaining law and order situation and uninterrupted functions of the assessee. Similarly the other contributions to the various Societies, Samitis and Sangeet Parishad including the Government Adarsh Higher Primary School for sponsorship of the sports tournaments are certainly for the publicity and business promotion of the assessee. Even otherwise, such type of contributions are participations of the assessee and monetary help in conducting the social welfare activity in the area would bring a good reputation and image of the assessee's business which is nothing but a business promotion activity of the assessee. Expenditures incurred by the assessee under the head Business Promotion and Welfare Activities is allowed. Addition made by the AO is deleted. - Decided in favour of assessee.
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Customs
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2020 (10) TMI 921
Validity of release order under Section 110A of the Customs Act - Betel Nuts - fulfilment of condition precedent for the release of the subject betel nuts - Circular dated 16-08-2017 - HELD THAT:- In the light of the decision of the Division Bench of Delhi High Court in AGYA IMPORT LIMITED VERSUS COMMISSIONER OF CUSTOMS, NEW CUSTOM HOUSE, NEW DELHI [ 2018 (10) TMI 573 - DELHI HIGH COURT ] where under it is held that Circular dated 16-08- 2017 is directory and not mandatory and also that the conditions for said Circular are merely guidance coupled with the order dated 20-02-2020 issued by the Superintendent (Adjn.) under which the betel nuts were provisionally released on deposit of 25% of the seizure value, I am of the considered view that the impugned order cannot be sustained especially when it is the specific case of the petitioner that the seizure value of the subject betel nuts is ₹ 52.23 lakh and under the impugned order the petitioner was asked to deposit an amount of ₹ 70.51 lakh. The matter is remanded back to the Commissioner of Customs (Prev.), NER, Shillong to reconsider the provisional release of the subject betel nuts belonging to the petitioner in the light of the decision of Delhi High Court in Agya Import Ltd and the order of the Superintendent (Adjn.) dated 20-02-2020 on which petitioner relied upon.
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2020 (10) TMI 902
Maintainability of petition - availability of alternative remedy of appeal - Provisional release of seized goods - Betel Nuts - petitioners argues that as no bonafide ''reasons to believe' existed, the seizure of the goods was wholly arbitrary and illegal - HELD THAT:- The statute that the power of seizure of goods under Section 110 of the Customs Act can be resorted to only when the Officer exercising the said power has ''reasons to believe' that the goods are liable to confiscation - In the present case, admittedly the goods were at Gorakhpur and not seized from any port or any custom area to form a belief that the goods were being imported into India. In the Panchnama, which the counsel for the respondents submits is a seizure memo, the only reasons recorded are that on a prima facie examination, the ''Areca Nuts' loaded in the Truck and as on some of the bags inscriptions in foreign language was written as well as that the ''Areca Nuts' on being taken out from the bags appeared to be of a foreign origin. The ''Areca Nuts' were shown to the local businessman and on the basis of their experience, they said that the ''Areca Nuts' appears to be of foreign origin. Thus, on these three grounds, the action for seizure was initiated. It is well settled that the ''reasons to believe' must be based upon acceptable materials, which have to be more than a moon shine. The material on record overwhelming suggests that the ''reasons to believe' were based upon the opinion of the local dealers, prima facie examination of the goods by naked eye and inscriptions in foreign language on some bags. We are not inclined to accept the reasons given for forming a belief for exercise of power of seizure are valid in law. The said reasons even fail the test of ''wednesbury principles' as no reasonable person can reach to conclusion of the country of origin of ''Areca Nuts' by mere perusal from naked eye as well as the opinion of the traders, as the Institutes as well as the Ministry have firmly opined that the country of origin cannot be traced by any laboratory method also. The respondent authorities shall forthwith release the goods i.e. ''Areca Nuts' as well as the vehicle in question in favour of the petitioner nos. 1 and 2 respectively on the petitioners filing a copy of this order before the authority concerned - petition allowed.
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Corporate Laws
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2020 (10) TMI 920
Oppression and mismanagement - non-service of notice - main issue raised by the appellant that he has not received notice for Board Meeting to be held on 20th January, 2020 at 4 PM and in the said meeting two directors have been appointed - Section 421 of the Companies Act, 2013 - HELD THAT:- As the subject matter on the validity of the meeting held with due notice or not will be decided over a period of time. We have also notice alleged two Board Meeting are allegedly held on 20th January, 2020 at 12 Noon and after that, on the same day at 4.00 PM. The Appellant contends that he has received notice of only one Board Meeting scheduled to be held 12 Noon on 20th January, 2020. However, service of notice of a second board meeting is disputed, which can be decided finally along with the petition. Meanwhile we think it proper to stay the operation on the Resolution passed in the alleged Board Meeting held at 4 PM on 20th January, 2020. We further expect that hencefortgh the Company and its Director will communicate with each other with e-mail in addition to communication by normal channel made by the Company. This will end the controversy regarding service of notice. We also direct that till the decision of this case account of the Respondent Company will be operated by all the four directors, who were operating the account before the alleged board meeting dated 20th January, 2020. Appeal disposed off.
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2020 (10) TMI 919
Approval of Scheme of Arrangement - Sections 230-232 of Companies Act, 2013 - HELD THAT:- The proposed scheme of compromise and arrangement should not be violative of any provisions of law and is not contrary to public policy. It is apparent from the records that there were irregularities and non-compliances from a very long time due to which Stock Exchange took action against the Respondent No. 1 Company and suspended the trading of its securities in the year 2002. Nothing has been brought on record that the Respondent No. 1 Company have taken any serious actions to make the requisite compliances so that trading of the shares of the company can be resumed. Non action of the Respondent No. 1 Company have serious impact on the investors who have invested their hard money in the company. These non-compliances and irregularities or any illegal act already committed cannot be ratified under the umbrella of scheme as envisaged under Section 230-232 of Companies Act, 2013. We have also gone through the observations made by the Regional Director, Western Region, Mumbai. These objections raised by the regional directors clearly points out the irregularities and non-compliances that were present at the time of sanctioning of scheme by the NCLT. The Company must be in compliance of the provision of law and cannot act just on the basis of a legal opinion. The respondent No. 1 Company should have instantly rejected the application money for 10,375 shares as the Application applied were for less than the minimum lot size i.e. 100 shares. The assertion of the Respondent No. 1 Company that it was unaware of the BSE Rejection Letter dated 6th May, 1999 until in the year 2012 is not tenable as the company was listed and must be in touch with the Exchange for various compliances. The scheme appears to be used as a course of action to rectify the irregularities previously done/committed by the Respondent No. 1 Company. Therefore, the grounds raised by the Regional Director for dismissing the petition seems to be just and reasonable - NCLT has overruled the objections raised by the Regional Director on the ground that the objections are mere on the procedural aspects and do not raise any illegality in the scheme or that it is against public policy. Even if the objections are procedural but it is the jurisdiction of the Tribunal that such procedural aspects need to be duly complied with before sanctioning of the scheme, as it would lay down a wrong precedent which would allow companies to do whatever acts without the compliances and confirmation of the Court and other sectoral and regulatory authorities and thereafter get it ratified by the Court under the Umbrella of scheme . It should have been contemplated that compliance of law in itself is a part of public policy. It is the duty of the Tribunal or any court that their Orders should encourage compliances and not defaults. The Scheme under section 230 of Companies Act, 2013 cannot be used as a method of rectification of the actions already taken. Before the scheme gets approved, the company must be in compliance with all the public authorities and should come out clean. There must be no actions pending against the company by the public authorities before sanctioning of a scheme under section 230 of the Companies Act, 2013. Appeal allowed.
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Insolvency & Bankruptcy
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2020 (10) TMI 918
Maintainability of application - initiation of CIRP - discrepancy in the demand notice - stand of the Appellant is that the amount in default as specified in the Demand Notice is to be in consonance with the Application filed and the invoices sent - Appellant submits that the Adjudicating Authority had failed to consider the fact that the material defect in the Demand Notice is fatal to the facts of the present case - HELD THAT:- In a given petition filed by the Operational Creditor there is a heavy burden on the Corporate Debtor to show that the dispute is a real and genuine one. Further, where a petition of the Operational Creditor was opposed by the Corporate Debtor on the ground that the dispute existed between the parties regarding the quality of the goods supplied but failed to raise the dispute within ten days of the receipt of Statutory Notice under Section 8 of the I B Code, it is held that the petition is maintainable - If a dispute truly exists in fact and is not a hypothetical or an illusory one, then, the Adjudicating Authority is to reject the Application. A defence being a mere bluster can also be rejected by an Adjudicating Authority . It cannot be lost sight off that an unpaid Demand Notice is evidence of Debtor s inability to pay its debts for the purpose of bankruptcy proceedings and it is a just ground for a creditor to justify the filing of the petition. An Adjudicating Authority is not to decide how much due is. Further, an Adjudicating Authority is required to examine before admitting or rejecting an application u/s 9 of the Code as to whether the dispute raised by the Corporate Debtor qualify as a dispute as defined under sub-section (6) of Section 5 and whether notice of dispute given by the Corporate Debtor satisfies the conditions prescribed in sub-section (2) of Section 8 of the Code. Further, the existence of an undisputed sum is a condition precedent for initiating Corporate Insolvency Resolution Process - In the present case, no reply was issued to the Demand Notice dated 06.04.2018 of the First Respondent / Operational Creditor by the Corporate Debtor and this is clearly an adverse circumstance against the Appellant, in the considered opinion of this Tribunal. In Law, an Adjudicating Authority is safely and surely to admit the Application, if the debt is proved and the default took place, the only rider being, that the Application must be complete as per the ingredients of the Court. Before the Adjudicating Authority the Application was filed on 06.04.2018. The outstanding amount was ₹ 9,42,841/- as on 22.09.2017 and hence, the Application filed was well within limitation. Suffice it for this Tribunal to point out that the impugned order passed by the Adjudicating Authority in admitting the application filed by the First Respondent / Operational Creditor does not suffer from any material irregularity or patent illegality in the eye of Law. Appeal dismissed.
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2020 (10) TMI 917
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - whether the party supposedly supplying the polymer granules is an operational creditor and the amount of invoice which is within limitation is an operational debt as defined in the IBC? - HELD THAT:- Section 5 (21) of the IBC defines operational debt to mean a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues. Quite obviously provision of goods or services is a pre-requisite for the existence of operational debt. In the present appeal the corporate debtor M/s N.R. Commercials Pvt. Ltd. has not only vehemently and flatly denied giving any purchase order for the said supply of polymer granules as claimed by the operational creditor or receiving any supply from her, he has in his reply to Demand Notice challenged the operational creditor to provide proof to substantiate her claim. The only evidence that the operational creditor has produced in support of her claim are a total of fourteen invoices (out of which only one is found under limitation for the purposes of IBC) which she has not been able to corroborate through any other document such as way bill, transportation document, tax invoice or tax remittance receipts - Thus the operational creditor has not been able to prove any purchase order being given by the Respondent for supply of polymer granules by her and rebut the averment and argument of corporate debtor calling the claim false and fabricated. Since the supply of goods is not established as required under Section 5(21) of the IBC, the existence of any payment towards such purchase is not established. The appellant has not been able to establish that she is an operational creditor in the case and a relationship of corporate debtor and operational creditor exists between the Appellant and the Respondent as required in the IBC. Therefore, she cannot claim any relief under Section 9 of the IBC - Appeal dismissed.
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2020 (10) TMI 916
Liquidation order - Section 60(5) read with Section 52(5) of the Insolvency and Bankruptcy Code, 2016 - applicability of moratorium - termination of PPA or not. Whether the moratorium declared under Section 14 of IBC applies to the PPA along with other immovable and moveable properties of the corporate debtor? - HELD THAT:- The IBC, 2016 is in the nature of beneficial legislation which strives to protect the national wealth that is included in the corporate business, partnership firms and individuals by providing economically sound and legally robust mechanism for reorganization and insolvency resolution. Hence, action under various provisions of IBC must be driven by such a spirit in legally sound manner - the PPA entered into between the power producer and the purchaser of power provides a long-term and steady stream of revenue accrual from the power project which forms the basis for repayment of any credit sourced by the power producer and provides necessary comfort to the financial creditor to give such credit. This is the economics behind such projects and this economic value of the project of the corporate debtor the IBC seeks to maximize during the resolution process. The solar power project, which generates and supplies solar power turns into an economic entity with the help of an instrument such as PPA, thereby converting the physical entity i.e. solar power plant into an economically useful entity for production of solar power. As explained above, the physical entity of the power plant when the becomes an economic project when a financial creditor provides capital after deriving comfort and assurance from the steady flow revenue by sale of solar power - the proposition that the solar power plant and the PPA related to the plant form one integrated economic asset appears to be a rational one. Therefore this asset needs to be kept intact and preserved during the process of corporate resolution and liquidation so that the liabilities of creditors and other stakeholders can be taken care of. Whether the contractual provisions of the PPA permit either of the contracting parties to terminate the PPA in view of the liquidation process of the corporate debtor which is underway under IBC? - HELD THAT:- Quite clearly the process of liquidation in the present case is going on and therefore, the liquidator should have full access to all assets of the corporate debtor to take meaningful steps for revival of the corporate debtor as going concern. In the present case, since the power producer has not suspended the supply of solar power and is willing to do the same, it stands to reason that the solar power project should be allowed to function as a going concern, so that revival of the power project as suggested under Section 230 of the Companies Act becomes possible - keeping in view the objective of the Insolvency and Bankruptcy Code, 2016 which relates to maximization of the value of assets for resolution of the corporate person, it stands to reason that the Solar Power Plant i.e. physical assets realizes its full economic value only if it functions in conjunction with the PPA. The steady and assured revenue stream resulting from the existence of the PPA is the sine qua non for the long-term economic and financial viability of the solar power project since it provides comfort and security to the financial creditors who feel encouraged to provide credit for the project. Therefore, the physical entity of the Solar Power Project working in conjunction with the PPA becomes necessary for maximization of the value of assets. This is especially true since the power producer is willing to generate and supply power and also in a position to do so to the GUVNL. Hence, the termination of PPA does not appear to be justified. Appeal dismissed.
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2020 (10) TMI 915
Maintainability of application - suspension of initiation of CIRP - bar created by law in terms of the newly inserted Section 10A coming into force - whether an application for initiation of CIRP of a Corporate Debtor in respect of default committed before 25th March, 2020 but filed before 05th June, 2020 i.e. the date on which amending ordinance came into force, in respect of such default, would be maintainable in view of the express bar created by the main provision of Section 10A? HELD THAT:- It is by now well settled that a substantive administrative right cannot be taken away except by clear indication of intention to that effect by an express statutory provision or by necessary implication. No statute, unless it deals with procedure only, can be construed to have retrospective operation unless there is an express provision to that effect or same can be inferred by necessary implication. The Section, beginning with a non-obstante clause overriding provisions of Sections 7, 9 10 of the I B Code places an embargo on filing of application for initiation of CIRP of a Corporate Debtor for any default arising on or after 25th March, 2020 for a period of six months or such further period as may be notified but not exceeding one year from such date. This provision is clearly prohibitory in nature and filing of applications under Sections 7, 9 10 in respect of default arising on or after 25th March, 2020 is clearly barred for the specified period of six months or the extended period not exceeding one year, if so notified. Proviso to this main provision creates a further bar qua a default that may occur during the specified period. This construction is placed on the proviso adopting purposive interpretation to advance the intended object of the Ordinance viz. to prevent corporate persons experiencing distress due to impact of COVID-19 pandemic. Any other interpretation would lead to absurdity and defeat the object of the amending Ordinance. The explanation clarifies that Section 10A cannot be interpreted to apply the embargo in terms of main provision to any default committed before 25th March, 2020 - An eligible applicant could, by no stretch of imagination, have the foresight of having even an inkling of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020being promulgated. The bar on initiation cannot operate in respect of applications filed for initiation of CIRP by the eligible applicant in respect of default committed before 25th March, 2020 though such application has been filed after 25th March, 2020 but before enforcement of Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 on 5th June, 2020. Such interpretation not only serves the object of basic legislation but also goes along the tone and tenor of Section 10A with the explanation appended thereto clarifying the mist, if any, surrounding, the newly inserted provision. In the present case, it can be seen that in Form-5 i.e. the application to the Adjudicating Authority as also in Form-3 i.e. Demand Notice, the Appellant- Operational Creditor has specified 30th April, 2020 as the date of default which clearly goes beyond the cut-off date. Therefore, the Adjudicating Authority was perfectly justified in rejecting the application under Section 9 of the I B Code at the instance of Appellant- Operational Creditor as the default has occurred after the cut-off date and the bar imposed under Section 10A was clearly attracted. Appeal dismissed.
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2020 (10) TMI 914
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- From the perusal of e-mail /correspondences between the Appellant/Corporate Debtor and Respondent/Operational Creditor, it is the case of the Appellant/Corporate Debtor that the Respondent has not completed the project in time thereby the Project was got delayed thereby they suffered losses. On the other side, the stand of Respondent/Operational Creditor that they have completed the Project and handed over to the Appellant/Corporate Debtor, however, Appellant/Corporate Debtor failed to pay bills even after complete of the project. It is unequivocal that there exists dispute between the parties prior to the issuance of Demand Notice dated 11.04.2019 - the learned Adjudicating Authority instead of taking a technical objection that the Appellant/Corporate Debtor has not replied to the Demand Notice issued by the Respondent/Operational Creditor within statutory period of 10 days as contemplated under Section 8(2) of IBC, should have analysed the documents placed before it, before taking such objection. Thus, the correspondences i.e., e-mail/letters show that there is existence of disputes prior to issuance of Demand Notice - Exchange of e-mails/correspondences, as referred above, clearly establishes that there is a pre-existing dispute between the parties regarding completion of the work and the Appellant/Corporate Debtor continuously made complaints regarding non-completion of work and deficiency in services, thereby loss caused to the Appellant/Corporate Debtor. Therefore, it is quite clear that there is pre-existing of dispute regarding completion of the work and the learned Adjudicating Authority ought not to have admitted the Application under Section 9 of IBC filed by the Respondent/ Operational Creditor. Even in the Reply filed by the Appellant/Corporate Debtor before the learned Adjudicating Authority pursuant to Section 9 Application, it is quite clear that there was sufficient material produced before the learned Adjudicating Authority and the learned Adjudicating Authority ought to have considered the materials placed before it - thus, the learned Adjudicating Authority should have considered the substantial material placed before it in its correct perspective, before passing the Impugned Order dated 04.06.2020 thus committed error. It is re-iterated that the Code is a beneficial legislation intended to put the Corporate Debtor on its feet and it is not a mere money recovery legislation for the Creditors. Initiation of CIRP set aside - matter is remitted back to the Adjudicating Authority to decide Fee and Cost of CIRP which shall be payable to Interim Resolution Professional/Resolution Professional by the Respondent/Operational Creditor - appeal allowed.
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2020 (10) TMI 913
Delay of 2 days in filing revised Resolution Plan - CIRP process still ongoing - Direction to Resolution Professional to take on record and consider the revised offer submitted by e-mail dated 14th February, 2020 - rejection on the ground that the Resolution Plan of the highest bidder has already been approved with 100% voting and the Application of Appellant suffered from latches and lacked bonafidies - HELD THAT:- In the instant case, Appellants submitted the Resolution Plan only two days after the revised plan of Respondent No.4 and well within the 180 days of ordinary timelines of CIRP under I B Code . There was no justification for its rejection by the Resolution Professional who was duty bound to place the same before the Committee of Creditors especially when the ordinary CIRP period of 180 days was still subsisting. The impugned orders suffer from grave legal infirmity besides involving factual frailty. The impugned orders are accordingly set aside and the appeals are allowed. The CIRP is directed to resume from the stage of consideration of the Resolution Plans. The Resolution Professional shall place the Resolution Plans of H1 and H2 besides revised Resolution Plan of Appellants before the Committee of Creditors for consideration. The Committee of Creditors would take a call in according consideration to such Resolution Plans keeping in view the extended timelines. The period of judicial intervention shall stand excluded while computing the extended timelines of 270 days.
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2020 (10) TMI 912
Direction to set aside the Order of the Liquidator rejecting the Claim of the Appellant - It is the Applicant s case that there was no requirement of registration of Charge with the R.O.C and that the Liquidator, without examining the Certificate issued by the Registration Authority under the M.V. Act dismissed the Claim made by the Applicant. HELD THAT:- It is clear from Section 52(3)(a) of the Code that before any security interest is sought to be realised by the Secured Creditor under this Section, the Liquidator shall verify such security interest and permit the Secured Creditors to realise only such security interest, the existence of which may be proved either by the records of such security interest maintained by an Information Utility or by such other means as may be specified by the Board - Section 52 (3) read with the aforenoted Regulation 21 stipulates that the proof of security interest is ascertained from records available with the Information Utility as per the Code; through the Certificate of Registration of Charge issued by the ROC under Section 77 of the Companies Act 2013/Section 125 of the Companies Act 1956, or, if there is any proof of Registration of Charge with Central Registry of Securitization Asset Reconstruction and Security Interest of India. The Appellant does not claim has not shown that Security Interest claimed by the Appellant is covered under any of the above clauses of Regulation 21 - The material on record does not show evidence that on failure of the Corporate Debtor under Section 77, Appellant had exercised their choice of registering the Charge under Section 78. Apart from the fact that the words of the statute are themselves precise and unambiguous and not in conflict with any other provisions of the Code or any other Act, (keeping in view the facts and circumstances of the instant case) read together with the objective of the statute and the Plain and unambiguous words of the relevant provisions, we are of the considered opinion that the Learned Adjudicating Authority has correctly applied the law - From the documentary evidence on record it is clear that no Charge has been registered under the provisions of Section 77(1) of the Companies Act 2013, in relation to the Subject Property. The Liquidator has rightly referred to Regulation 21 of IBBI (Liquidation Process) Regulation, 2016 and observed that the Appellants Claim was not supported by any evidence as prescribed under the said Regulation. It is also an admitted fact that the Charge was not registered under Central Registry of Securitization Asset Reconstruction and Security Interest of India. The contentions of the Learned Counsel appearing for the Appellant that Registration with Motor Vehicle Authority under Section 51 of the Motor Vehicles Act, 1988 would suffice, cannot be sustained. Section 51(1) of the MV Act, 1988 only provides for entry in the Certificate of Registration regarding the agreement. The Section provides how to deal with the entry. To reiterate, in the instant case, as the Security Interest was neither registered with the Information Utility ; nor under Section 125 of the Companies Act, 1956/Section 77 of the Companies Act, 2013; no Application was preferred under Section 87 of the Companies Act, 2013; Charge was not registered in the Securitisation Asset Reconstruction and Security Interest of India, we are of the opinion that Section 52(3)(b) of the Code and Regulation 21(b) of the (Liquidation Process), Regulation, 2016 are not complied with - when in present matter Charge was not registered as per the provisions of Section 77 (1) of the Companies Act 2013 and as envisaged under the Code, the Creditor cannot be treated as a Secured Creditor . Appeal dismissed.
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2020 (10) TMI 911
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has defaulted in making repayment of financial facilities/debt to the Petitioner and the date of default is from 10.04.2016 and onwards as per Annexure-IV/27 Colly. The Statement of accounts and the CIBIL Reports submitted by the applicant confirm the default committed by the Corporate Debtor. This Adjudicating Authority is satisfied that, (a) The Corporate Debtor availed Financial Facilities from the Petitioner. (b) Existence of debt is above Rs. One Lac; (c) Debt is due and defaulted. (d) Default has occurred on various dates starting from 10.04.2016 onwards as per Annexure IV/27 Colly. (e) Petition has been filed on 13.11.2017 i.e. within the limitation period. (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner under Section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate-Debtor-Company. Petition admitted - moratorium declared.
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Service Tax
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2020 (10) TMI 910
CENVAT Credit - input service - Deposit Insurance Service provided by DICGC - output service is Banking and Other Financial Service - credit denied on the ground that such services have no nexus or connectivity with the actual performance of the banking service provided by the assessee-appellant - HELD THAT:- The issue with regard to availment of cenvat credit on the disputed service was highly debatable and there were conflicting views by different benches of the Tribunal. For resolving the dispute, the Larger Bench was constituted. In the case of M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [ 2020 (6) TMI 278 - CESTAT BANGALORE] , the Larger Bench of the Tribunal vide order dated 20.03.2020, reported in 2020-TIOL-861-CESTAT-BANG-LB has answered the reference holding that The insurance service provided by the Deposit Insurance Corporation to the banks is an input service and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering output services'. Credit allowed - appeal allowed - decided in favor of appellant.
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2020 (10) TMI 909
CENVAT credit - input services - insurance service received by the bank from the Deposit Insurance and Credit Guarantee Corporation (DICGC) - HELD THAT:- The issue with regard to availment of cenvat credit on the disputed service was highly debatable and there were conflicting views by different benches of the Tribunal. For resolving the dispute, the Larger Bench was constituted. In the case of South Indian Bank Vs. Commissioner of Customs, Central Excise Service Tax, Calicut, the Larger Bench of the Tribunal [ 2020 (6) TMI 278 - CESTAT BANGALORE - LB ] has answered the reference holding that The insurance service provided by the Deposit Insurance Corporation to the banks is an input service and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering output services . Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (10) TMI 908
Refund of accumulated unutilized Cenvat Credit of Krishi Kalyan Cess - HELD THAT:- On the subject issue much water flown and this tribunal s two larger bench judgments one in the case of M/S. GAURI PLASTICULTURE P. LTD., BOMBAY DYEING MANUFACTURING CO. LTD., M/S. SIMPLEX MILLS CO. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, INDORE, THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI IV, THE UNION OF INDIA THROUGH THE COMMISSIONER OF CENTRAL EXCISE MUMBAI I [ 2019 (6) TMI 820 - BOMBAY HIGH COURT] and in case of STEEL STRIPS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2011 (5) TMI 111 - CESTAT, NEW DELHI] are contradictory - There are various high courts judgments such as UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT] from Karnataka High Court, M/S. WELCURE DRUGS AND PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2018 (8) TMI 1169 - RAJASTHAN HIGH COURT] of Hon ble Rajasthan High Court and COMMISSIONER OF C. EX., NASIK VERSUS JAIN VANGUARD POLYBUTLENE LTD. [ 2010 (6) TMI 171 - BOMBAY HIGH COURT] from Bombay High Court - Now the larger bench of the Bombay High Court in the case of M/s. Gauri Plasticulture Pvt. Ltd. though after considering the SLOVAK INDIA TRADING CO. PVT. LTD. of Karnataka High Court which was upheld by the Hon ble Supreme Court taken a view that accumulated unutilized Cenvat Credit cannot be refunded. The Larger Bench judgment of the Bombay High Court has been challenged before the Hon ble Supreme Court in SLP(C) No. 007390/2020 registered on 09.06.2020 which is pending at present. In this position of law, no purpose will be served if any order is passed by this tribunal when the matter is seized with the Hon ble Supreme Court. Matter to the Adjudicating Authority for passing the denovo order after the outcome of Hon ble Supreme Court in the case of BOMBAY DYEING MANUFACTURING CO. LTD. V/s. CCE in the aforementioned SLP - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2020 (10) TMI 907
Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining 'C' forms under the provisions of the Central Sales Tax Act, 1956 - HELD THAT:- In the case of M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] , wherein the identical issue as arising before me has been considered and decided holding that Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. The State has, after the date of the above order, filed a Writ Appeal challenging the decision in the case of Ramco Cements (Supra) that has been considered and dismissed by a Division Bench of this Court on 09.03.2020. Though she submits that the State intends to file further appeal order dated 09.03.2020 prevails as on date. Petition allowed.
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Indian Laws
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2020 (10) TMI 906
Grant of Anticipatory Bail - right to get anticipatory bail, fundamental right or not - Dishonor of Cheque - section 138 of NI Act - petitioner has submitted that the present FIR is counter-blast to the complaint filed by the petitioner against the complainant under Section 138 of the NI Act - HELD THAT:- The complaint was made to the police by the complainant against the present petitioner. The police even conducted a preliminary enquiry in the matter before registration of the FIR. The police prima facie found that the petitioner, in fact, has indulged in the crime in the manner alleged against her. Not only this, the police also found the documents of the complainant, which were required for sending her abroad, with the present petitioner. It has also come on record that the complainant's family had sold agricultural land for giving amounts to the petitioner in installments of ₹ 70 thousand, ₹ 10 lacs, ₹ 10 lacs, ₹ 4 lacs, ₹ 35 thousand and ₹ 10 thousand/-. Therefore, this court finds that there are specific allegations against the petitioner, which have some force as per the record, as well as, as per the preliminary enquiry, allegedly conducted by the police. Although, the counsel for the petitioner has submitted that the present FIR has been lodged as a counter-blast to the complaint filed by the petitioner against the complainant under Section 138 of the NI Act, however, it is a matter of record that the said complaint filed by the petitioner has since been dismissed and the complainant has already been acquitted of the charges in that case. Therefore, this submission of the counsel for the petitioner is totally irrelevant for the purpose of the present matter - this court does not find any ex-facie innocence on the part of the petitioner vis- -vis the allegations levelled against her. Otherwise also, since the investigation is at initial stage, therefore, the police would be require to effect recoveries of the material/evidence to unearth the true dimensions of the alleged crime by the petitioner. Hence, protecting the petitioner at this stage would hamper the free and fair investigation of the case as well. This court does not find this to be a fit case to exercise its power under Section 438 Cr.P.C so as to protect the petitioner against her arrest - Petition dismissed.
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2020 (10) TMI 905
Dishonor of Cheque - offence under Section 138 of the Negotiable Instruments Act - rebuttal of presumption - HELD THAT:- If the cheque was misused to the detriment of the accused with such huge financial implications, no man of ordinary prudence sits back without initiating any action against the complainant or the said Shamala Godi which was not done by the accused. This circumstance also weighed with the Courts below - Further, as admitted by the accused herself, she was involved in similar cheque bounce case as was evident by Ex.P-9 - the joint memo filed in Crl.Misc.No.93/2013 on the file of the II Additional J.M.F.C., Chikmagalur. These records show that accused was involved in the similar case on the allegation of borrowing loan from one Annapoorna issuing cheque and the cheque was dishonoured. Ex.P9 the joint memo shows that the accused settled the said matter for ₹ 1,00,000/- ultimately. Ex.P10 was the certified copy of the application filed by Annapoorna in Crl.Misc.No.93/2013 for recovery of compensation of ₹ 1,50,000/- in pursuance of the order passed in C.C.No.1630/2007 convicting the accused for the offence punishable under Section 138 of NI Act. The trial Court has rightly convicted and sentenced the accused and that was confirmed by the First Appellate Court. This Court finds no ground to admit the petition - Petition dismissed.
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2020 (10) TMI 904
Dishonor of Cheque - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - restoration of the complaint which was returned to the complainant - HELD THAT:- It is not in dispute that the present respondent had instituted a criminal case against the present petitioners in the trial Court for the offence under Section 138 of the NI Act. Though the learned counsel for the petitioners contends that, after return of the complaint, the complainant did not present the same before the jurisdictional Court, but the same is proved to be not correct in view of the observation made by the trial Court in the impugned order, where it is clearly stated that the matter was presented before the Salem Court and again it was returned, in view of the NI Ordinance 2015. Thus it is clear that, subsequent to return of the complaint by the trial Court, the complainant had filed the said complaint before the appropriate jurisdictional Court. However, by virtue of the amendment to Section 142 of the NI Act, which is with effect from 15.06.2015, once again the complainant has approached the original trial Court. No doubt he has made an application under Section 142 of the NI Act, but making such an application would not in any way cause any prejudice to either side. On the other hand, it would enable him to get reentry in the trial Court by bringing to its notice the amended provision of Section 142 of NI Act - since the materials placed before this Court go to show that, after return of the complaint, the complainant has filed the complaint at then prevailing jurisdictional Court and by subsequent amendment to Section 142 of the NI Act, has once again approached the trial Court, I do not see any illegality or irregularity in the impugned order challenged in this petition. Petition dismissed.
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2020 (10) TMI 903
Dishonor of Cheque - section 138 of NI Act - sale of land under Coercion - complainant contended that the accused though agreed under Ex.P1 to sell his lands and received ₹ 24,00,000/- as advance sale consideration, cheated him alienating the properties to others - Void agreement or not - illegal consideration or not - HELD THAT:- The primary document to be proved was Ex.P2 the Cheque. Ex.P1 was produced to substantiate that the Cheque was issued towards the discharge of liability under a land deal. According to the complainant in all, ₹ 24,00,000/- was received and Cheque was issued towards liability of ₹ 24,00,000/- plus ₹ 10,00,000/- as damages for breach of agreement - the accused in his affidavit admits that Ex.P1 was issued by him but under coercion. The theory of coercion is also rejected. Further, before the First Appellate Court another agreement as per Ex.R1 was produced where the receipt of ₹ 24,00,000/- was admitted. Therefore, the fact that amount mentioned in Ex.P1 was ₹ 23,00,000/- does advance the case of the accused. Void Agreement or not - accused contends that in the grant order there was bar for transfer of lands for 15 years from the date of the grant, therefore, the agreement under Ex.P1 and Ex.R1 were void - HELD THAT:- No such defence was taken before the trial Court and the Appellate Court. The said contention is being raised for the first time before this Court. On that count only the said contention is liable to the rejected - Even otherwise the accused did not produce the grant order or the copy of the grant order to show that there was a bar for alienation. It is a settled position of law that mere agreement to sell does not amount to transfer of property. What would be barred is the transfer of property and not agreement to transfer the property. Therefore, there is no merit in the contention that the agreement was void. Illegal Consideration or not - accused contended that the agreements Ex.P1 and Ex.R1 were void, therefore, as per Section 23 of the Indian Contract Act, 1972 the consideration becomes illegal and the recovery of the same cannot be enforced - HELD THAT:- The contention that agreements was void is already rejected. Apart from that, Section 65 of the Indian Contract Act binds him to refund the money received. The said section bars the accused from making unjust enrichment - Looked from any angle, there is no error, illegality, incorrectness in the judgments of conviction and sentence passed by the Courts below. The revision petition is dismissed.
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