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TMI Tax Updates - e-Newsletter
May 17, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Refund on CGST and IGST - denial only on the ground that his claim got consolidated under one head of SGST - petitioner's specific case is that due to error and new system of software in GST, the entire refund liability of ITC got auto populated under the head of SGST instead of CGST, SGST and IGST - If due to error on the part of any software in GSTN, this had occurred obviously, the petitioner cannot be expected to produce proof for the same. - Matter restored back - HC
Income Tax
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Adjournment sought - request for adjournment made by the Revenue - Pandemic, health, stress and advanced age can be a relevant factor for the assessee who is a senior citizen to seek early settlement of disputes. This request, in our view, is perfectly justified and every citizen has a right to seek such early disposal. Central Government officers, during the pandemic are expected to perform their duties in accordance to law. - AT
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Scheme of faceless assessment - the time given to the petitioner to show cause was virtually of three days only - It is deemed appropriate that rather than this Bench, which does not have taxation matters on its roster, hearing and deciding the said question, the matter be considered by the Roster Bench dealing with taxation matters, so that there is a consistency of opinion inasmuch as the question is likely to arise in many cases and if we proceed and take a view and the Roster Bench is of a different view, the need for referring the matter to a larger Bench, delaying the disposal of the matter, may arise. - HC
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Seeking release of attachment over the commercial property - The contention raised on behalf of the respondents that the attachment cannot be lifted to permit the petitioner to pay the tax under the Direct Tax Vivad Se Vishwas Act, 2020 scheme in case of the company in which the petitioner is director, cannot be accepted because the petitioner is requesting to lift the attachment on the ground that there is sufficient security as against the outstanding demand and the reason for lifting the attachment is in addition to the prayer of the petitioner to lift the attachment to show his bona fide. In such circumstances, it cannot be said that the petitioner is not entitled to the prayer for lifting the attachment in order to pay the tax payable under the Direct Tax Vivad Se Vishwas Act, 2020 Scheme. - HC
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Reopening of assessment u/s 147 - notice beyond the period of four years - No error is pointed out in the returns or annexures filed by the petitioner or any of the details filed at the time of assessment and in such an instance, the proceedings for assessment, initiated beyond a period of four years, is barred by limitation. It appears that the Assessing Officer had lost sight of the issue now raised. - HC
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Revision u/s 263 - Ld. Pr. CIT exercising jurisdiction under section 263 of the Act, directed the AO to make fresh assessment on the issues which were not the subject matter of the limited scrutiny. CIT(A) has exceeded jurisdiction u/s 263 of the Act by directing the AO to make fresh assessment on the issues which were not the subject matter of the assessment framed on the basis of limited scrutiny. - AT
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Undisclosed income u/s 68 - In the present case the assessee has explained the nature and source of the amount in question and to substantiate his contention submitted cash flow statement - AO has not given his findings on this point. We, therefore, find merit in the contention of the assessee that in the absence of any adverse findings by the AO on the source of earning of the assessee, the authorities below have wrongly treated the amount in question as undisclosed income u/s 68 of the Act and computed the Tax liability under the provisions of section 115 BBE of the Act. - AT
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Income taxable in India - TDS on payment to Federal Aviation Agency FAA -USA - the payments are not excluded from the purview of Section 196 on this ground. FAA per se cannot be treated as a foreign sovereign Government. There is no general immunity from taxation unless specified which is found absent by going through the agreements entered between the two organizations. That leads to a conclusion that the taxability is determined based on the law of the land and the treaties entered between two nations as sovereign entities. - AT
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Undisclosed overseas deposits - We keep in mind all these peculiar facts and circumstances more particularly the fact that such religion congregations indeed involve day to day running expenses and hold that a lumpsum disallowance of 50% of the expenses in all these assessment years would meet the ends of justice (including 30% already made) with a rider that the same shall not be treated as a precedent in other case. AO is directed to allow 50% of the assessee’s expenses claimed in consequential computation as per law within three effective opportunities of hearing therefore. - AT
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Nature of land sold - Capital asset u/s 2(14) or agricultural land - it is categorically clear that the travel distance of Nighu village by road is around 9 kilometers from boundaries of Navi Mumbai Municipal Corporation and hence, the same would decide the ambit of definition of capital asset within the meaning of Section 2(14) of the Act and hence, there cannot be any levy of capital gains. - AT
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Special audit u/s 142(2A) - the exercise of jurisdiction under section 142(2A) of the Act has been exercised in a mechanical, routine and perfunctory manner and so is the approval granted by the CIT as all the formalities were done on the same day. Therefore the assessment framed by the AO cannot be sustained as the same suffer from legal infirmities of improper exercise of jurisdiction on the part of the tax authorities u/s 142(2A) of the Act. - AT
Customs
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Levy of Interest - demand of interest before determining liability of customs duty - it is fact on record that the appellant has enjoyed duty paid way back in 2013 on the goods in question. Therefore, the question mark on the person who has received duty, who can duty, who is liable to pay interest thereon and duty has been enjoyed by the appellant themselves how can demand interest from the respondent without determine liability. - AT
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Refund of SAD - rejection on the ground of time limitation - If importer imported goods in March, 2020, after lockdown due to the Pandemic Covid 19 in all over country, second wave of Pandemic and various parts of India is under locked down, if the importer failed to sell the imported goods, the importer shall be put on another burden of SAD which is otherwise entitled of refund on payment of VAT/Sales tax. - Matter referred to larger bench - AT
Indian Laws
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Dishonor of Cheque - insufficiency of funds - In the present case, the trial Court as well as appellate Court have come to the conclusion that the accused had taken loan from the complainant for which he issued the impugned cheque which was dishonoured by bank for insufficiency of fund in his account. The signature of the accused petitioner on the impugned cheque has been proved. The accused did not lead any evidence to rebut the presumption taken by the Courts below under Section 139, N.I Act. He did not even come in the witness box to support his case. - HC
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Dishonor of Cheque - inter-corporate loan (in the form of deposit) given to petitioner being one of the Directors - The settled proposition of law is that though there is civil remedy available in connection with a commercial transaction, but there is no legal impediment to launch a separate prosecution under Section 138 of N.I. Act, subject to the fulfilment of the ingredients constituting such offence, which is indeed different from the instant one, where fraudulent and dishonest intention on the part of the accused/petitioner are the essence of offence, complained of. Therefore, the instant prosecution is very much permissible and with the sanction of law. - HC
IBC
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Fresh claim after approval of Resolution Plan - Consequence of Award in the arbitration proceedings - The view of the Supreme Court as crystallized in Essar is that pre-existing and undecided claims which have not featured in the collation of claims and consequent consideration by the Resolution Professional shall be treated as extinguished upon approval of the Resolution Plan under Section 31 of the IBC. This can be seen as a necessary and an inevitable fallout of the IBC in order to prevent, in the words of the Supreme Court, a “hydra head popping up” and rendering uncertain the running of the business of a corporate debtor by a successful resolution applicant - HC
Case Laws:
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GST
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2021 (5) TMI 497
Seizure of goods alongwith the vehicle - e-invoice and e-way bill were not available at the time of interception - e-invoice and e-way bill were produced before the competent authority - Confiscation order - HELD THAT:- The petitioner approached the authorities for provisional release of goods under Section 67(6) of the GST Act on 30.04.2021. It is stated that by a communication dated 03.05.2021, the authority declined the provisional release of goods. Let Notice be issued making it returnable on 20.05.2021.
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2021 (5) TMI 493
Violation of principles of natural justice - Service of pre-assessment SCN - notice was sent to the earlier business address of the petitioner, which was never received by petitioners - change of address of petitioners - HELD THAT:- The impugned Assessment Orders passed by the 1st respondent for the periods 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18 are set aside - the matters are remitted back to the 1st respondent for fresh consideration; the 1st respondent shall issue pre-assessment show cause notice to the petitioners to the address mentioned in the cause title in the Writ Petitions in accordance with Rule 64(1)(b) of the Telangana VAT Rules - Petition allowed by way of remand.
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2021 (5) TMI 487
Refund on CGST and IGST - denial only on the ground that his claim got consolidated under one head of SGST - petitioner's specific case is that due to error and new system of software in GST, the entire refund liability of ITC got auto populated under the head of SGST instead of CGST, SGST and IGST - HELD THAT:- When the petitioner has received show cause notice for the rejection of the refund application, the petitioner in his reply dated 24.01.2019 and 14.05.2019, had categorically stated that they filed refund application indicating that the entire refund claim got auto-populated under a single head, namely, SGST. If due to error on the part of any software in GSTN, this had occurred obviously, the petitioner cannot be expected to produce proof for the same. In any event, the petitioner had submitted the refund applications manually also. If the petitioner was otherwise eligible to refund, on the ground of technical glitches and error having occurred due to auto-population, the petitioner ought not to be denied relief. Nothing can be more unfair. The orders impugned in these writ petitions are set aside to the extent they reject the refund claim of the petitioner made under CGST and IGST. The matter is remitted to the file of the second respondent - Petition allowed by way of remand.
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Income Tax
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2021 (5) TMI 502
Adjournment sought - request for adjournment made by the Revenue - assessee moved an application for final hearing and disposal of the appeal on priority basis on the ground that the respondent is an aged man of 77 years having health issues and is under tremendous strain due to the prevailing pandemic situation - HELD THAT:- We find that both the parties are citing the pandemic as the reason for either, early disposal of the matter or for seeking indefinite postponement of the adjudication of the matter. In our view, the Revenue's present request is highly unreasonable and unwarranted. From seeking adjournment for a period of thirty days to further period of three weeks and thereafter coming with a request for a further period of three months' adjournment, today a request is made by the Department for an adjournment for a further period of six (6) months. On the earlier dates of hearing, the adjournments were sought on the ground that a special counsel Mr. Girish Dave is being appointed as he had represented the Revenue before the ITAT on the very same matter during the first round of appellate proceedings in the month of August, 2018. It was submitted by the ld. CIT(D/R) that Mr. Girish Dave has given consent on 31.03.2021 to represent this matter. Today, suddenly, the Revenue seeks time to engage another Special Counsel, in the place of Mr. Girish Dave, who has already given his consent, on the ground that the Assessing Officer did not find the performance of Mr. Dave, to be satisfactory on the earlier occasions i.e., in August, 2018. This sudden change of mind of the AO is not explained. The performance of Mr. Girish Dave was known to the Department in August, 2018 itself. We wonder as to why it took so long for the AO to come out with this opinion that the performance done thirty months back is not satisfactory. Why it was not satisfactory, is not stated. The order of the ITAT dated 16.11.2018 has not been challenged before the Hon ble High Court and so it has attained finality. The entire narrative of the Department is being changed when the Bench has directed the Department to reply on the issue of maintainability of this appeal. The AO is the appellant and he is bound to reply to the Bench of the ITAT on the issue of defects in the appeal From no. 36 and to the issue of maintainability of the grounds of appeal. He is duty bound to file reply addressing the maintainability of the appeal and cannot dodge the issue at this stage and make excuses. Revenue is also raising strong objections, without any valid ground, for the hearing of the appeal by the Bench on the preliminary issues of maintainability of the appeal. These objections are hereby rejected. This Bench has been highly accommodative and has granted a number of adjournments to the Department till date despite strong and valid objections of the assessee who is a sr. Citizen with health issues and who is requesting resolution of all his disputes at an early date due to the pandemic. Government offices and Senior Officers above the rank of Deputy Secretary to the Govt. of India, are duty bound to attend office and discharge their duties during this pandemic. The cases before the ITAT are being represented by the Officers of the rank of Additional Commissioner of Income Tax as well as Commissioner of Income Tax on a regular basis all through this pandemic. Even complicated Transfer Pricing and international tax matters have been heard and disposed off during this pandemic period. No officer tried to avoid arguing the cases and have been coming fully prepared. Pandemic, health, stress and advanced age can be a relevant factor for the assessee who is a senior citizen to seek early settlement of disputes. This request, in our view, is perfectly justified and every citizen has a right to seek such early disposal. Central Government officers, during the pandemic are expected to perform their duties in accordance to law. Order - a) The request for adjournment made by the Revenue is granted for the last time. However, the request of the Revenue for six months stay/adjournment is rejected. b) The appeal is posted for final hearing on the preliminary objection raised in respect of maintainability of the appeal on 24/05/2021. No further adjournment shall be granted in this appeal to either parties. c) The appeal is directed to be de-listed from the category part heard .
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2021 (5) TMI 501
Disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) - HELD THAT:- As assessee had not made any physical investment in joint ventures and the figures represent in the investment schedule is nothing but the share of profit from joint ventures over all the years and hence, the entire computation mechanism provided in Rule 8D(2) of the Rules fails as the substance of the transaction would prevail over its form. Though the assessee had shown that the accumulated share of profits from joint ventures under the head investment , it is effectively a current account transaction or loans given to the joint ventures by the assessee and the same does not partake the character of actual investments, if any, made by the assessee in the joint venture. Hence, we hold that the entire computation mechanism of Rule 8D(2) of the Rules fails and hence, there could not be any disallowance u/s.14A of the Act that could be made in the facts and circumstances of the instant case. Levy of the dividend distribution tax on the dividend distributed / paid to Italian Thai Development Public Company Limited, Thailand - @15% in terms of Article 10 -Dividends of the Double Taxation Avoidance Agreement (DTAA) between India and Thailand instead of 16.995% levied in terms of section 115-O of the Act - HELD THAT:- The assessee pleaded before us that as per Article 10 of the Double Taxation Avoidance Agreement (DTAA) between India and Thailand, the rate of dividend distribution tax to be applied is 15%. Accordingly, the ld. AR pleaded that the excess dividend distribution tax paid by the assessee 1.995% (16.995% 15%) may kindly be directed to be refunded to the assessee. As this aspect is purely a legal issue going to the root of the matter and does not involve verification of any facts, we are inclined to admit this additional ground and take up the same for adjudication in the light of the decision of NTPC Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ] We deem it fit to set aside this additional ground to the file of the ld. AO to examine the same in the light of judgment of the Hon ble Supreme Court in the case of M/s. Tata Tea Company Ltd.[ 2017 (9) TMI 1300 - SUPREME COURT ] and Godrej and Boyce Manufacturing Company Ltd.[ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] - The assessee is at liberty to furnish fresh evidences, if any in support of its contentions. Accordingly, the additional ground raised by the assessee is allowed for statistical purposes.
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2021 (5) TMI 496
Scheme of faceless assessment - Maintainability of petition - Jurisdiction of High court - Return of income selected for scrutiny and notice under Section 143(2) of the Act was issued - the time given to the petitioner to show cause was virtually of three days only - Principle of natural justice - HELD THAT:- As enquired from the counsel for the respondents once the respondents have introduced the scheme of faceless assessment through the respondent no. 1 National Faceless Assessment Centre at Delhi, how can the respondents object to the jurisdiction of this Court being invoked, irrespective of the locate/situate of the assessee. Attention of the counsel for the respondents is drawn to Kusum Inglots Alloys Ltd. Vs. Union of India [ 2004 (4) TMI 342 - SUPREME COURT ] where it was held that petition under Article 226 of the Constitution of India against an order or a finding of a Court or Tribunal or executive authority situated at Delhi, is maintainable at Delhi, though this Court, in exercise of discretion under Article 226 of the Constitution of India and invoking the doctrine of forum non conveniens, may refuse to entertain the same and ask the petitioner to approach the appropriate Court. It was further held that when the original authority is constituted at one place and the appellate authority is constituted at another, a writ petition would be maintainable at both the places. It was yet further held that as the order of the appellate authority (in that case) constitutes a part of cause of action, a writ petition would be maintainable in the High Court within whose jurisdiction it is situate, having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of the original authority merges with that of the appellate authority. In the recent judgment in Maharashtra Chess Association Vs. Union of India [ 2019 (7) TMI 1755 - SUPREME COURT ] also, the argument that the jurisdiction under Article 226 of the High Court of Bombay stood ousted because of the parties having agreed to the jurisdiction of the Courts at Chennai, was rejected and it was held that once the High Court of Bombay had jurisdiction, merely because another High Court also had jurisdiction and the parties had agreed to the jurisdiction of that High Court, was only a factor to be considered in the exercise of discretion, whether to entertain the writ petition in that High Court or not. It is deemed appropriate that rather than this Bench, which does not have taxation matters on its roster, hearing and deciding the said question, the matter be considered by the Roster Bench dealing with taxation matters, so that there is a consistency of opinion inasmuch as the question is likely to arise in many cases and if we proceed and take a view and the Roster Bench is of a different view, the need for referring the matter to a larger Bench, delaying the disposal of the matter, may arise. Subject to the orders of Hon ble the Chief Justice, list this petition before the Roster Bench, on 17th May, 2021.
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2021 (5) TMI 491
Release of jewellery as retained/seized in the course of search - HELD THAT:- As given to understand that the process of considering the petitioner's representation was ongoing and additional time was sought. It is brought to notice today that on 08.04.2021, the Deputy Commissioner of Income Tax, Central Circle -1(2) has conveyed the approval of the Principal Commissioner of Income Tax for release of 5825.59 gms of jewellery and communicated the same to the Assessing Officer. The letter states that the process of release is underway. This is recorded. In the light of the same, the mandamus sought stands achieved. Let the process of release be completed after observing all formalities and procedures as required under the Rules within a period of four (4) weeks from today.
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2021 (5) TMI 490
Denial of natural justice - petitioner state that no opportunity was given either to her son or the petitioner, to inspect the records and take copies of the documents, by considering the representation of the petitioner's son dated 06.11.2019 and therefore, an opportunity should have been given to the petitioner to inspect the documents - HELD THAT:- In view of the same, the respondent is directed to dispose of the representation of the petitioner's son, dated 06.11.2019, on merits and in accordance with law, by affording an opportunity of hearing to the petitioner, within a period of six weeks from the date of receipt of a copy of this order.
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2021 (5) TMI 488
Seeking release of attachment over the commercial property - recovery proceedings - entitlement to the prayer for lifting the attachment in order to pay the tax payable under the Direct Tax Vivad Se Vishwas Act, 2020 Scheme - HELD THAT:- As Income tax department is fully secured with attachment over the residential property of the petitioner together with five bank accounts with regard to the outstanding dues which is reflected in the portal of income tax department being ₹ 1.08 crores as on 9.2.2021. It is not disputed by the respondents that the valuation report dated 21.12.2018 of the Government Approved Valuer placed on record are not true and correct. Therefore, taking into consideration the value of the residential property which is valued at ₹ 7,42,40,000/ , 50% thereof belonging to the petitioner is about ₹ 3.71 crores which is much more than the outstanding demand of ₹ 1.08 crores as reflected in the portal of the income tax department. The petitioner has made an application for release of attachment over the commercial property in order to pay the amount of tax to the income tax department in case of M/s. Rahul Textiles Industries Private Ltd wherein the petitioner is one of the directors and as the said company has applied under the resolution scheme of Direct Tax Vivad Se Vishwas Act, 2020, we are of the opinion that if the attachment placed by the respondents on commercial property situated at World Trade Centre being Office No. 407, Udhna Darwaja, Ring road, Surat, is lifted, there would not be any prejudice to the respondents income tax department as it is fully secured by continuing the attachment over the residential property and five bank accounts. On the other hand, if the attachment is lifted, the petitioner would be in a position to pay the tax payable under the resolution scheme to the department. The contention raised on behalf of the respondents that the attachment cannot be lifted to permit the petitioner to pay the tax under the Direct Tax Vivad Se Vishwas Act, 2020 scheme in case of the company in which the petitioner is director, cannot be accepted because the petitioner is requesting to lift the attachment on the ground that there is sufficient security as against the outstanding demand and the reason for lifting the attachment is in addition to the prayer of the petitioner to lift the attachment to show his bona fide. In such circumstances, it cannot be said that the petitioner is not entitled to the prayer for lifting the attachment in order to pay the tax payable under the Direct Tax Vivad Se Vishwas Act, 2020 Scheme.
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2021 (5) TMI 486
Reopening of assessment u/s 147 - notice beyond the period of four years as stipulated in Section 147 - excess claim of deduction under Section 10AA - HELD THAT:- The provisions of Section 147 prescribe a limitation of four years normally, extended to six years in cases where an order of scrutiny has been passed at the first instance. In addition, the petitioner should have defaulted in filing of the return, or the proceedings for re-assessment should be based on the failure of the petitioner to have made full and true disclosure of income. These conditions are not satisfied in the present case, seeing as the return of the petitioner has, admittedly, been filed within time and the disclosure of the petitioner is also not in question. In fact, the original order passed under Section 143(3) proceeds to examine the claim of exemption under Section 10AA, minutely. No error is pointed out in the returns or annexures filed by the petitioner or any of the details filed at the time of assessment and in such an instance, the proceedings for assessment, initiated beyond a period of four years, is barred by limitation. It appears that the Assessing Officer had lost sight of the issue now raised. Explanation 2(c) to Section 147 will not come to the aide of the relevance as, while the income chargeable has been made subject to excessive relief, the explanation cannot override the statutory prescription of limitation as set out in the proviso to Section 147. The purpose of the Explanation is merely to explain the scope of re-assessment as set out in the statutory provision and not to expand on or tinker with the limitation set out thereunder. - Decided in favour of assessee.
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2021 (5) TMI 485
Revision u/s 263 - directions for fresh assessment on the issues which were not the subject matter of the assessment framed on the basis of limited scrutiny - wrong allowance of exemption u/s 54 as assessee had not deposited the capital gain in Capital Gain Deposit Account before the specific date - HELD THAT:- Admittedly, the case of the assessee was selected for limited scrutiny under CASS for the reason that there is substantial increase in the capital in the relevant year and the AO passed the assessment order and accepted the return filed by the assessee after examining the issue regarding increase in capital account as the assessee had credited his capital account with agricultural income and the capital gain from sale of flat. The assessee has reflected that same in its capital account - Further in response to the letter dated 07.10.2016 issued by the AO during assessment proceedings, the assessee submitted his reply explaining the reason for increase in capital. Ld. Pr. CIT exercising jurisdiction under section 263 of the Act, directed the AO to make fresh assessment on the issues which were not the subject matter of the limited scrutiny. CIT(A) has exceeded jurisdiction u/s 263 of the Act by directing the AO to make fresh assessment on the issues which were not the subject matter of the assessment framed on the basis of limited scrutiny. Further, no contrary decision was brought to our notice by the Ld. DR. Hence the appeal of the assessee and set aside the impugned order passed by the Ld. Pr. CIT u/s 263 - Decided in favour of assessee.
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2021 (5) TMI 484
Revision u/s 263 - as per CIT AO has not conducted a proper inquiry with regard to the land development expenditure - HELD THAT:- Action under section 263 could be taken if twin conditions viz. impugned order should be erroneous, and it should be prejudicial to the interest of the Revenue. In the present case, when the assessee has not claimed any expenditure, then where is the prejudice to the Revenue; where is the loss to the Revenue. Veracity of such expenditure taken to the work-in-progress could be examined in the year when sales will be made. This plea has been specifically raised by the assessee before the ld.CIT, but the ld.CIT did not record any finding, even did not consider it. Hence, order of the ld.Pr.Commisisoner is not sustainable, it deserves to be quashed. Accordingly, appeal of the assessee is allowed
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2021 (5) TMI 482
Undisclosed income u/s 68 - computation of tax liability under the provisions of section 115 BBE - Addition based on notebooks found in search - assessee admitted that the said notebook contains entries relating to his business concern and declared the additional income during the survey action - case was selected for scrutiny and the AO passed assessment order u/s 143 (3) and accepted the return - HELD THAT:- Section 68 of the Act, applies where any sum is found credited in the books of account maintained by the assessee for any previous year and the assessee fails offer any explanation about the nature and source thereof or the explanation by the assessee is not satisfactory in the opinion of the AO, the sum so credited may be treated as income of the assessee of that previous year. In the present case the assessee has explained the nature and source of the amount in question and to substantiate his contention submitted cash flow statement - AO has not given his findings on this point. We, therefore, find merit in the contention of the assessee that in the absence of any adverse findings by the AO on the source of earning of the assessee, the authorities below have wrongly treated the amount in question as undisclosed income u/s 68 of the Act and computed the Tax liability under the provisions of section 115 BBE of the Act. We are of the considered view, the sole ground raised by the assessee is covered in favour of the assessee by the decision of the coordinate Bench in the case of Shri Bhuwan Goyal [ 2020 (10) TMI 27 - ITAT CHANDIGARH] . CIT(A) has erred in upholding the action of the AO in treating the amount in question as undisclosed income u/s 68 of the Act. Hence, respectfully following the decision of the coordinate Bench in the case discussed above, we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to compute the Tax on the said amount treating the same as business income of the assessee. Appeal of the assessee is allowed.
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2021 (5) TMI 481
TP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- Assessee is primarily engaged in providing software development and software consultancy services to AEs. These services have been collectively referred as 'Software services', thus companies functionally dissimilar with that of assessee need to be deselected. Thinksoft Global Services Limited - Having perused the Director's report, Annual report of Thinksoft Global Services Limited, it is evident that datas are available in public domain as the company is listed with the Bombay Stock Exchange. These facts were not refuted by the Ld. DR. Further, the Ld. DR also could not bring on record any materials contrary to these facts. Having heard the parties herein, taking totality of facts and circumstances, we direct the AO/TPO to include Thinksoft Global Services Limited as comparable Company with that of the assessee company in the final list of comparables. Thus, Ground No. 8 raised in appeal by the assessee is allowed. Exclude Cybermate Infotek Limited, Infobeans Systems Private Limited from the final list of comparable companies as regards the assessee as functionally dissimilar. Cybercom Datamatics Information Solutions Limited - It is an undisputed fact, the assessee had submitted annual report for AY 2013-14 and not for AY 2012-13. Thus, qualitative as well as quantitative data regarding this company i.e. Cybercom Datamatics Information Solutions Limited was not available before the Ld. CIT(Appeals) for proper adjudication to decide whether this company should be excluded from the final list of comparables or not. In view thereof, in the interest of justice, we set aside the order of the Ld. CIT(Appeals) on this comparable and remand the same to the file of the AO/TPO to determine from company's annual report for the year under consideration in respect of Director's report, notes of accounts and audit report regarding the functional comparability of the company. Thirdware Solutions Limited - As DR submitted that this issue may be remanded to the file of the AO/TPO for detailed factual verification based on annual report and other relevant documents in order to verify the nature and scope of the function of Thirdware Solutions Limited. The Ld. Counsel for the assessee did not raise any objection to this proposition. We are of the considered view, in the interest of justice, we agree with the submissions of the Ld. DR and considering the facts and circumstances, we restore this ground to the file of the AO/TPO for determining functionality of this company
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2021 (5) TMI 480
Levy of penalty u/s. 271(1)(C) - defective notice u/s 274 - non specifying clear-cut charge of Concealment of Income or furnishing inaccurate particulars of income - HELD THAT:- The Revenue could not dispute the fact that notice u/s. 271(1)(c) of the Act does not specify specific charge whether it is against the filing of accurate particulars of income or concealing particulars of income. As relying o M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] hereby quash the penalty order as the initiation of penalty is not in accordance with law - Decided in favour of assessee.
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2021 (5) TMI 479
Action of CIT(A) in admitting additional evidence filed by the assessee - non-genuineness of overseas commission expense - CIT(A) treating the Overseas Commission expenses as a genuine business expense - HELD THAT:- The power of the appellate authority to direct for the production of a document or examination of the witness as a matter of fact is in furtherance of any enquiry contemplated by Section 250(4) of the Act is contained in sub Rule 4 of Rule 46-A of the Rules and it can be exercised to enable the appellate authority to dispose of the appeal or for any other substantial cause necessary for the adjudication of the controversy involved in appeal. The power of the appellate authority is like a inherent power which can be exercised suo-motu without any application from any of the contesting party. And in order to follow the principles of natural justice or fair play, Appellate Authority can ask for the any detail which are relevant for the disposal of the an appeal. Commission agent to overseas commission is concerned as per Hon ble Supreme Court judgment in TOSHOKU LIMITED (AND ANOTHER APPEAL) [ 1980 (8) TMI 2 - SUPREME COURT] the assessee is not liable to deduct TDS for any payment which is made to overseas agent. And we do not find any infirmity in the order passed by the Ld. CIT(A). However, we refuse to entertain the present appeal. Appeal filed by the Revenue is dismissed.
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2021 (5) TMI 478
Income taxable in India - TDS on payment to Federal Aviation Agency FAA -USA - Airport Authority of India (AAI) has entered into Memorandum of Agreement with Federal Aviation Administration, USA (FAA), for providing technical assistance to AAI by way of providing its personnel and meeting on ATFM requirements and assisting AAI in connection with ATFM by development of detailed quantitative requirements, detailed ATFM system architecture and draft ATFM implementation plan - Whether the payment is made a sovereign state (FAA) by another sovereign state (AAI) is not taxable and hence no TDS is deductible or not? - HELD THAT:- Organization under the Government with budgetary support of the state and recourses of its own but not a Government unto itself. The employees of both the organizations namely AAI and FAA are called Government employees for the convenience of implementation agreements. The agreement between AAI and FAA is of a commercial character (acta jure gestionis) and state is not liable for the actions or contracts entered between the parties which is different from acts of state and its sovereign capacity (acta jure imperii). Hence, the payments are not excluded from the purview of Section 196 on this ground. FAA per se cannot be treated as a foreign sovereign Government. There is no general immunity from taxation unless specified which is found absent by going through the agreements entered between the two organizations. That leads to a conclusion that the taxability is determined based on the law of the land and the treaties entered between two nations as sovereign entities. In case of presence of a treaty or agreements like DTAA, they may take precedence in determination of the taxability of the entities involved. Reference is also invited to the Provisions of Section 10(15A) wherein the payments made to foreign Government are exempt. Article 285 and Article 289 provides for collection of taxes and the exemption of items from the purview of taxation. Thus, we find that wherever the legislature intended to accord exemption, they have been specifically provided for in the Income Tax Act. The words used The Government cannot be used to connote A foreign Government too. To conclude, we hereby hold that the transactions between the AAI and FAA and the profits arise thereof would be subjected to provisions of Indian Income Tax Act. Whether based on the agreements, the payment is in the nature of reimbursement are not? - On going through the agreements, we find that the agreement dated 13.11.2006 signed between the Joint Secretary, Ministry of Civil Aviation and the FAA Administrator was primarily on the pedestal of incurring of expenses on reimbursement basis for providing technical assistance. A concurrent reading of Section 4(2) and Section 195(1), denotes that the liability to deduct tax arise only when the payee is a non-resident and the amount payable to him is chargeable to tax in India. From the perusal of the agreement, since the payments are on cost to cost basis which do not involve any element of profit, the reimbursement is not liable for any Income Tax payable and accordingly the provisions of TDS are not to be attracted. The Hon'ble Calcutta High Court in the case of Dunlop Rubber Company Ltd.[ 1982 (2) TMI 24 - CALCUTTA HIGH COURT ] held that reimbursement of actual expenditure from an Indian company cannot be treated as taxable. Reimbursement by the vary definition doesn't include income element and hence provisions of TDS are not attracted. Reliance is being placed on the judgment of Hon'ble Jurisdictional High Court in the case of CIT Vs Industrial Engineering Projects [ 1992 (7) TMI 38 - DELHI HIGH COURT ] wherein it was held that reimbursement expenses cannot be regarded as revenue receipt, hence, no TDS is deductible. Whether the services rendered are in the nature of FIS chargeable to tax under DTAA or not? - The concept of make available requires that the fruits of the services should remain available to the service recipient in some concrete shape such as technical knowledge, experience, skills, etc. The assistance provided by FAA in preparation of QRs and development of ATFM system are neither any licensed product of FAA nor exclusive patents of FAA. The assistance rendered on reimbursable basis is based on the agreement between MoCA and FAA of US. ATFM technology per se has not been made available to the AAI for any perpetual use. The provision of assistance to MoCA in developing and modernization of civil aviation structure, review analysis and documentation of a traffic flow management system is a dynamic process requiring further development of the process by the MoCA, India. This is a case of assistance and technical cooperation between FAA and AAI sans any commercial interest by the rendering party. Based on the manner of transacting, agreements, services provided, reimbursement received, we unhesitatingly hold that as the make available clause contained in article 12(4)(b) has not been satisfied in the facts and circumstances of the present case, the payment made by the assessee could not be regarded as for the purpose of fees for included services (FIS). Appeals of the assessee are allowed.
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2021 (5) TMI 477
Taxation of royalty income - consider the royalty income worked out in terms or the APA - seeking modification in quantum of royalty, received from the Indian AE, being taxed in the hands of the assessee - quantum of actual refunds of royalties - HELD THAT:- The practical connotations of the second proviso to Section 92CE(1) was that relief granted by insertion of words on or after the 1st day of April 2017 in Section 92CE(1)(iii) was with prospective effect. Learned CIT(DR) has been a bit too na ve in ignoring the import of words if any, by virtue of provisions of this sub-section as they stood immediately before their amendment by the Finance (No. 2) Act, 2019 shall be claimed and allowed in the proviso, and, therefore, ended up reading a bit too much into this rather innocuous and unidimensional provision. It is thus not correct to say that, in principle, in terms of the provisions of section 92CE, no refund of taxes could be claimed or allowed on account of secondary adjustments- even if, for example, as in this case, such secondary adjustments end up reducing the income of the foreign AE assesses as a result of partial repatriation of income. A lot of emphasis is then placed by the learned CIT(DR) on the claim that the action of the assessee, in partially refunding the royalty amount to the GIA India, i.e., Indian AE, was voluntary inasmuch as the assessee was not a party to the APA. Nothing, however, turns on this plea. Whether the refund was voluntary or under a legal obligation, it does not really make any difference as long as the refund is bonafide and particularly when its commercial expediency is not, and rightly so, even called into question. None of the objections taken by the DRP or raised by the learned CIT(DR), for the detailed reasons, set out above, really impresses us. Thus we are of the considered view that, in principle, the claim of the assessee deserves to be accepted. However, as learned CIT(DR) rightly points out, factual aspects with respect of these claims, i.e., with respect to verifications and quantum of actual refunds of royalties by the assessee, have not been examined at any stage. We, therefore, deem it fit and proper to accept the claim of the assessee, in principle, but remit it back to the Assessing Officer for verification of factual elements embedded in the claim of the assessee. Ordered, accordingly. Appellant has a Permanent Establishment ( PE ) in India or not? - HELD THAT:- Issues in appeal are squarely covered by a decision of the coordinate bench, in assessee s own case for the immediately preceding assessment year i.e. 2010-11 [ 2019 (7) TMI 859 - ITAT MUMBAI] wherein held Assessing Officer has erred in invoking section 9 of the Act and/or Article 5 of the India-USA DTAA in order to say that the assessee company has a PE in India. Thus, assessee succeeds on this issue Taxing the royalty received during the year u/s. 44DA of the Income Act - whether DRP has erred in holding that the royalty income is effectively connected with the alleged PE of the Appellant in India and is therefore taxable u/s. 44DA of the Income Tax Act, 1961 @40% - HELD THAT:- As LR agree that once we come to the conclusion that there is no PE on the facts of this case, there will be no occasion of royalty being effectively connected with the PE or taxability of royalty under section 44DA. This issue is also, therefore, academic and infructuous in the present context. Levy of interest under section 234B - HELD THAT:- AR fairly agree that since the assessment year before us pertains to the period prior to insertion of Explanation to Section 209(1), with effect from 1st April 2012, the law stood at that point of time, irrespective of the actual deduction of tax at source, as long as the tax is deductible at source, the tax deductible will be reduced from the advance tax liability. That is what Hon ble jurisdictional High Court has held in the case of DIT Vs NGC Network Asia LLC [ 2009 (1) TMI 174 - BOMBAY HIGH COURT] The levy of interest under section 234B, on the facts of this case when tax withholding obligations under section 195 were clearly applicable in respect of any payment, having an element of income taxable in India, to the assessee, is wholly unsustainable in law. We, therefore, uphold the plea of the assessee on this point.
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2021 (5) TMI 476
Section 37(1) expenditure disallowance, 10% estimated expenditure disallowance of cash payment and prior period expenditure disallowance - CIT(Appeals) has followed the tribunal's order in assessee's case in A.Y. 2008-09 restoring the very issues back to the Assessing Officer for his afresh necessary factual verification - HELD THAT:- We thus find no merit in the Revenue's instant former grievance as the CIT(Appeals) has followed judicial consistency in issuing necessary verification directions to the Assessing Officer. The Revenue fails in its instant former two substantive grounds therefore. Prior period expenditure disallowance - CIT(Appeals) has followed the tribunal order in A.Y. 2010-11 whilst holding that the assessee had claimed the impugned expenditure because of the fact that the corresponding bills has been received in the relevant previous year only - HELD THAT:- We decline the Revenue's argument in view of the fact that the assessee's impugned expenditure has crystallized in its relevant previous year as the recipient had issued the correspondingly bill much later. The third substantive ground is also declined therefore. Addition u/s. 40(a)(ia) - CIT(A) deleted the addition u/s. 40(a)(ia) on the ground that it is a mere provision and hence no tax is deductible at source - HELD THAT:- As the impugned sum represents only a provision made by the assessee in the relevant previous year without any corresponding payment or any details of the bills as it could not have deducted TDS in absence of any payee; whatsoever. We thus observe that the assessee/deductor could not have complied with Chapter XVII provisions since such compliance involves the latter party in whose hands the income is admittedly assessed. We thus decline the Revenue's argument seeking to revive 40(a)(ia) disallowance for this precise reason alone. CIT(Appeals) ought to have enhanced the assessee's income since the said expenditure is not an ascertained liability and also his powers are co-terminus with that of Assessing Officer - We find no substance in Revenue's argument since it can held to be an aggrieved party having locus standi to challenge correctness of CIT(Appeals)'s inaction; if any than an action deciding the issue in tax payer's favour. This Revenue's argument is also fails therefore. CIT(Appeals) ought to have upheld the impugned 40(a)(ia) disallowance in the case of short deduction of TDS - Hon'ble Kolkata high court in DCIT Vs. S.K. Takriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT ] holds that sec. 40(a)(ia) does not apply its case involving short deduction of TDS. We thus uphold the CIT(Appeals)'s action deleting the impugned disallowance on this last count as well. Revenue's appeal is dismissed.
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2021 (5) TMI 471
Undisclosed overseas deposits - Disallowance of corresponding business expenditure @70% - initiation of Section 153A proceedings - HELD THAT:- Neither the assessee has been able to substantiate all the corresponding expenses incurred abroad as wholly and exclusively for his preaching activity business nor the Assessing authority as well as the CIT(A) have taken any basis for the impugned estimation @30% only. We keep in mind all these peculiar facts and circumstances more particularly the fact that such religion congregations indeed involve day to day running expenses and hold that a lumpsum disallowance of 50% of the expenses in all these assessment years would meet the ends of justice (including 30% already made) with a rider that the same shall not be treated as a precedent in other case. AO is directed to allow 50% of the assessee s expenses claimed in consequential computation as per law within three effective opportunities of hearing therefore. Disallowance of overseas payment made to Shri Aashish Thomas in the nature of AED 36501 - We notice from a perusal of the corresponding assessment order dt.17-03-2016 that the assessee failed to substantiate the same as running business expenditure which has already been allowed @50%. We thus confirm the impugned payment disallowance
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2021 (5) TMI 470
Interest income assessed under the head income from other sources - assessee has reduced interest earned on temporary fixed deposits with bank from work in progress on the ground that funds parked in temporary fixed deposits is having inextricable link with project of setting up of manufacturing facility and consequently, same cannot be assessed under the head income from other sources - plea of the assessee is that although, assessee has filed various evidences before learned CIT(A) in light of certain judicial precedents to prove nexus between funds parked with fixed deposits and interest income earned from fixed deposits, but learned CIT(A) has not considered any evidences filed by assessee - HELD THAT:- We find that learned CIT(A) has simply upheld order passed by Assessing Officer by following judgement M/s. Tuticorin Alkali Chemicals Fertilizers Ltd 1997 (7) TMI 4 - SUPREME COURT] even though assessee has cited subsequent decision of CIT Vs. M/s. Bokaro Steel Ltd.[ 1998 (12) TMI 4 - SUPREME COURT] and Indian Oil Panipat Power Consortium Ltd. [ 2009 (2) TMI 32 - DELHI HIGH COURT] where courts after considering decision of M/s. Tuticorin Alkali Chemicals Fertilizers Ltd (supra), held that if funds kept in fixed deposits is having inextricable link with project, then interest earned on short term deposits should be reduced from work in progress, but cannot be assessed under the head income from other sources. Although, assessee has cited those judgements, learned CIT(A) has not considered judgements cited by assessee before deciding the issue. Issue needs to go back to the file of learned CIT(A) to decide the issue in light of various evidences filed by assessee including decision of Hon ble Supreme Court in the case of M/s.Bokaro Steel Ltd. Hence, we set aside the issue to the file of learned CIT(A) to decide the issue afresh in accordance with law. Appeal filed by assessee is treated as allowed for statistical purposes.
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2021 (5) TMI 469
Nature of land sold - Capital asset u/s 2(14) or agricultural land - Addition made on account of sale of land by treating the same as agriculture land - AO found that the assessee had not disclosed any income from capital gains - HELD THAT:- Assessee had obtained certificate dated 18/01/2021 from independent registered Architect who had certified the distance between land and the boundary of Navi Mumbai Municipal Corporation by stating that aerial distance is approximately 3.5 kilometers and by road distance it is 9.01 kilometers and more. We find that assessee had also obtained a certificate from Town Planning department of NMMC for travel distance by road on 14/10/2015 which certificate has also been taken due cognizance by the Hon ble High Court in para 14 of its order. This certificate has been issued by the Architect and Interior designer Mr. Suresh Kirtane on 18/01/2021 on the basis of map generated with Google map for shortest travel distance by road, Google Earth for aerial distance along with map of NMMC boundary and proposed land Mumbai Metropolitan Regional Plan. The subject mentioned land sold is an agricultural land. What is to be seen is only whether it is a rural agricultural land or urban agricultural land which would determine the taxability under the head income from capital gains . We find that the Hon ble High Court had restored this issue to the Tribunal to consider a certificate dated 14/10/2015 issued by the Town Planning department of NMMC. We have considered the said certificate and from the perusal of the same, it is categorically clear that the travel distance of Nighu village by road is around 9 kilometers from boundaries of Navi Mumbai Municipal Corporation and hence, the same would decide the ambit of definition of capital asset within the meaning of Section 2(14) of the Act and hence, there cannot be any levy of capital gains. We find that the ld. CIT(A) had rightly deleted the addition made on account of long term capital gains. - Decided against Reveue.
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2021 (5) TMI 468
Special audit u/s 142(2A) - CIT(A) upholding the exercise of jurisdiction u/s 142(2A) by the Assessing Officer by directing Special Audit without demonstrating the complexity in the books of accounts and holding that the assessment is not barred by limitation - assessee was selected under scrutiny and statutory notices were duly served to the assessee - HELD THAT:- The special audit under section 142(2A) of the Act has to be directed by the Assessing Officer only in the genuine cases where the Assessing Officer finds that he is not in a position to assessee the income of the assessee having regard to the complexities in the books of accounts. For the exercise of this power u/s 142(2A), it has been provided that the prior approval has been taken from the CIT which is a statutory safeguard provided in the Act against any unreasonable or arbitrary exercise of power by the Assessing Officer which has to be granted by the CIT after following the due process and after dule application of mind. The approval by the CIT should be granted after examining and after due application of mind to the proposal submitted by the Assessing Officer but in the present case it appears not to be so. The assessee filed objection to the show cause notice on 30.12.2020 and Assessing Officer after considering the reply of the assessee framed the proposal containing 16 issues in the draft order proposed under section 142(2A) of the Act and thereafter the same was sent to CIT through Addl. CIT and approval was accorded on the same day by the CIT. But as is apparent from the facts before us, the exercise of jurisdiction under section 142(2A) of the Act has been exercised in a mechanical, routine and perfunctory manner and so is the approval granted by the CIT as all the formalities were done on the same day. Therefore the assessment framed by the AO cannot be sustained as the same suffer from legal infirmities of improper exercise of jurisdiction on the part of the tax authorities u/s 142(2A) of the Act. We are not in agreement with the conclusion of ld. CIT(A) on the issue of upholding the assessment as the same is barred by limitation in view of the fact that order under section 142(2A) was directed only to extend the period of limitation under the Act. Accordingly, we set aside the order of the CIT(A) on the issue and quash the assessment framed by the Assessing Officer as being barred by limitation. Several adhoc additions/disallowances out of expenses and one main addition on account of valuation of closing stocks - HELD THAT:- The valuation as done by the assessee was disputed by the special auditor for the reasons that the same is not supported with evidences which was calculated on estimated realisable value by the assessee on some technical assessment of stocks. According to the assessee the estimated realisable value is based upon the realisation in the subsequent year. But the sales realisation was higher in the subsequent year due to depreciation in the value of rupees vis a vis foreign exchange. The assessee is in this trade for the last more than 50 years and has been following accounting policy consistently qua valuation of stocks which has duly been disclosed in audited accounts under significant accounting policies. We note that the cut and polished diamonds are valued on the basis of technical assessment only right from the beginning as per trade practices and the said method of valuation is in accordance with mandatory accounting standard AS-2 issued by ICAI. The method of valuation of stocks is accepted by the department right from the beginning in all the years. We have also examined the financial statements of various listed companies which are into the diamond manufacturing business besides experts opinions on valuation. Moreover any addition in closing stock is tax neutral as the closing stock of the current year will become the opening stock of the following year. Even the Hon ble Apex Court in the case of Chainswarup Sampatram [ 1953 (10) TMI 2 - SUPREME COURT] has held that it is wrong to think that any profit rises out of valuation of stocks. Therefore even stock addition appears to wrong and fallacious and rightly been deleted by the ld CIT(A). - Decided against revenue.
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Customs
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2021 (5) TMI 504
Levy of Interest - legality of demanding and recovering of interest from the respondent before determining liability of customs duty - mis-declaration of description and value of the goods - HELD THAT:- The facts of the case are in dispute are that the duty has been received by the appellant from the importer way back in 2013 by the importer and with the Revenue. It is also the fact on record that on 31.3.2018 out of charge was given to the department to the respondent for the delivery of the goods to the importer. However, it is also fact on record that the goods have already been cleared for home consumption by way of auction by the respondent. In that circumstance, the dispute arose whether the Hon ble High Court has directed to the appellant vide order dated 21.11.2019 [ 2020 (1) TMI 1181 - PUNJAB AND HARYANA HIGH COURT] to consider the refund of duty paid and quantum of duty on declared seized goods way back in 2013. Thereafter the department woke up and quantum of recovery of duty from the appellant and till date no order has been issued or no show cause notice has been issued for recovery of duty on the subject goods. Admittedly, it is fact on record that the duty of the said goods already been recovered by the appellant in 2013 itself and it is in the knowledge of the department. The appellant never received duty from the importer. The Revenue is taking shelter of the Final Order No.60358/2020 dated 4.3.2020 [ 2020 (4) TMI 422 - CESTAT CHANDIGARH] . According to the spirit of the order of this Tribunal, there was no goods in question were in the custody of the custodian in terms of section 47 of the Act then the duty is payable by the custodian but no such notice has been issued to the respondent by the appellant to determine the liability on the respondent. Moreover, it is fact on record that the appellant has enjoyed duty paid way back in 2013 on the goods in question. Therefore, the question mark on the person who has received duty, who can duty, who is liable to pay interest thereon and duty has been enjoyed by the appellant themselves how can demand interest from the respondent without determine liability. Appeal dismissed - decided against Revenue.
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2021 (5) TMI 483
Refund of SAD - rejection on the ground of time limitation - time limit prescribed for filing refund claim is one year from the date of payment of SAD or not - N/N. 102/2007-Cus dated 14.9.2007 as amended by N/N.93/2008-Cus dated 1.8.2008 - HELD THAT:- As per the observations made by the Hon ble Apex Court in CC (PREVENTIVE), MUMBAI VERSUS M/S M. AMBALAL CO. [ 2010 (12) TMI 16 - SUPREME COURT] , the exemption notifications in question are to be interpreted liberally. N/N. 93/2008-Cus prescribes that exemption from special CVD in specific is not available without VAT/Sales tax is paid by the importer. Further mandates notification is that SAD which has been levied on the importer is to safeguard the VATA/Sales tax is to be paid by the importer/trader at the time of sale of the goods. Therefore, if the importer sells the goods and make payment of VAT/Sales tax then the importer is entitled to claim refund of SAD paid by them at the time of import of the goods. If the goods are not sold by the importer, the importer is not entitled for refund of SAD paid by him. The importer shall claim refund of such additional duty of customs paid on the imported goods with the jurisdictional Customs officer before expiry of one year from the date of payment of additional duty. COVID Pandemic situation - HELD THAT:- If importer imported goods in March, 2020, after lockdown due to the Pandemic Covid 19 in all over country, second wave of Pandemic and various parts of India is under locked down, if the importer failed to sell the imported goods, the importer shall be put on another burden of SAD which is otherwise entitled of refund on payment of VAT/Sales tax. Further, unless and until the goods are sold on payment of VAT/Sales tax, cause of action for refund of SAD does not arise, the said issue has not been addressed by the Division of this Tribunal in the case of C.C. -NEW DELHI (ICD TKD) (IMPORT) VERSUS AGGARWAL TRADING COMPANY [ 2018 (10) TMI 1572 - CESTAT NEW DELHI] , the same has been addressed by the Single Member Bench of this Tribunal on various occasions. In that circumstance, as there are contrary views of this Tribunal, then it would be in the interest of justice, the matter needs to be referred to the Larger Bench of this Tribunal to decide the following issues: Whether the time limit prescribed for filing refund claim of SAD paid by the importer is one year in terms of Notification No. 93/2008(Cus) dated 01.08.2008 which has been issued in terms of section 25(1) of the Customs Act, 1962 without selling the imported goods by the importer within one year of payment of SAD shall be applicable or not? The Registry is directed to place the records before the Hon ble President for constitution of Larger Bench to decide the issue.
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Corporate Laws
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2021 (5) TMI 500
Approval of Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- From the records, it is seen that in the First Motion Application filed before this Tribunal vide CA/960 961/CAA/2019 wherein it was represented that there are 1 Preference Shareholder, 2 Equity Shareholders, 5 Unsecured Creditor and no Secured Creditor in relation to the Transferor Company and 2 Equity Shareholders, 8 Secured Creditors and 26 Unsecured Creditors in relation to the Transferee Company and based on the consent Affidavits obtained, accordingly sought for dispensation of the meeting of the Preference/Equity Shareholders and Secured/Unsecured Creditors of both the Transferor and Transferee Companies. Based on such application moved under Sections 230-232 of the Companies Act, 2013, this Tribunal vide its order dated 26.09.2019 dispensed with the meeting of the Preference/Equity Shareholders, and Secured/Unsecured Creditors of the Transferor and Transferee Companies and the second motion petition was filed before this Tribunal by the Petitioner Companies on 06.11.2019 for sanction of the Scheme of Amalgamation as contemplated between the Petitioner Companies. It is seen from the records that the Petitioner Companies have filed affidavits of service via email to the Registry of this Tribunal on 18.09.2020 in relation to the compliance of the order passed by the Tribunal as noted above and a perusal of the same discloses that the Petitioner Companies have effected the paper publication as directed by the Tribunal in one issue of News Today (Chennai Edition) in English and Dhinamani (Chennai Edition) in Tamil on 20.06.2020. Further notices have been also served to (i) The Regional Director, Southern Region, Chennai on 11.06.2020 (ii) Registrar of Companies, Chennai on 11.06.2020 (iii) Income Tax Authorities on 11.06.2020 (iv) Official Liquidator, Chennai on 11.06.2020 and proof of the same acknowledgements/receipts have also been enclosed. The Petitioner Companies have filed the certificate of the Independent Statutory Auditor in relation to compliance with the Accounting Standards with respect to the Scheme. Thus, the Petitioner Companies have complied with proviso to Section 230(7)/Section 232(3) of the Companies Act, 2013. The scheme is approved - application allowed.
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2021 (5) TMI 473
Approval of the Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- It is seen from the records that the Petitioner Companies have filed affidavits of service via email to the Registry of this Tribunal on 14.09.2020 in relation to the compliance of the order passed by the Tribunal as noted above and a perusal of the same discloses that the Petitioner Companies have effected the paper publication as directed by the Tribunal in one issue of Business Standard (Chennai Edition) in English and Dinamani (Chennai Edition) in Tamil on 29.06.2020. Further notices have been also served to (i) The Regional Director, Southern Region, Chennai on 11.06.2020 (ii) Registrar of Companies, Chennai on 11.06.2020 (iii) Income Tax Authorities on 11.06.2020 (iv) Official Liquidator, Chennai on 11.06.2020 (v) Department of Pharmaceuticals on 11.06.2020 and proof of the same acknowledgements/receipts have also been enclosed. The Regional Director, (for brevity 'RD') Chennai to whom notice was issued has filed his Report before this Tribunal on 09.09.2020, eventhough not represented before this Tribunal has stated that Clause 9 of Part II of the Scheme provide for protection of the interest of the employees/staff/workmen of the Transferor Company. It is also stated that as per the report of Registrar of Companies, Chennai, both the Transferor and Transferee Companies are regular in filing the statutory returns and there is no prosecution filed, no complaints pending and no inspection/investigation has been ordered/pending in respect of both the companies. Thus, the RD after examining the Scheme, except for the above observation, has decided not to make any objection to the Scheme. In relation to the observation as made by the RD, the Transferee Company has filed an Affidavit by way of email to the Registry of this Tribunal on 14.09.2020 and it is stated in the said Affidavit that the Transferee Company has undertaken to file the revised Memorandum of Association/Articles of Association factoring the merger of the authorized capital with the Registrar of Companies and has also undertaken to make payment of the differential authorized capital fee on account of merger of authorized capital. Further, it has also been stated in the said Affidavit that the Appointed Date in the Scheme shall be 01.04.2019 and there would not be any change in the date. The Official Liquidator sought to take on record and consider the report of the Chartered Accountant and has also sought to fix the remunerations payable to the Auditor who has investigated into the affairs of the Transferor Company - The Petitioner Companies have filed the certificate of the Independent Statutory Auditor in relation to compliance with the Accounting Standards with respect to the Scheme. Thus, the Petitioner Companies have complied with proviso to Section 230(7)/Section 232(3) of the Companies Act, 2013. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal, sanctions the Scheme of Amalgamation, annexed as Annexure A4 with the Company Petitions as well as the prayer made therein - While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. Petition allowed.
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Insolvency & Bankruptcy
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2021 (5) TMI 503
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Jurisdiction - time limitation - service of notice - HELD THAT:- The Applicant has filed an affidavit under section 9(3)(b) dated 05.09.2019 affirming that no notice of dispute has been given by the Corporate debtor relating to dispute of the unpaid operational debt. Jurisdiction - HELD THAT:- The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. Time Limitation - HELD THAT:- The last invoice was raised on31.03.2018, and the present application was filed on 20.09.2019, hence the debt is not time barred and the application is filed within the period of limitation. Existence of debt and default or not - HELD THAT:- The present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, and moreover stand admitted as the corporate debtor appeared before the court and sought time for settlement. Therefore, the default of the operational debt is established beyond doubt. Application is admitted - moratorium declared.
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2021 (5) TMI 499
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - Service of notice - HELD THAT:- Notice was issued to the Corporate Debtor vide order dated 19.11.2020 of the Adjudicating Authority. Further, it has been observed that neither a reply to the Section 9 application was filed by the Corporate Debtor nor has the Corporate Debtor ever appeared before the Adjudicating Authority - the Corporate Debtor in its reply to the Demand Notice dated 23.01.2020 has raised various disputes which arose before the issuance of the Demand Notice, however the Corporate Debtor has never appeared before the Adjudicating Authority to support its claim therefore, vide order dated 15.12.2020 the Corporate Debtor was proceeded ex-parte. Time Limitation - HELD THAT:- The date of default is 27.09.2019 which is the date of the last invoice issued which was unpaid, and the present application is filed on 16.02.2020. Hence the application is not time barred and filed within the period of limitation. Jurisdiction - HELD THAT:- The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The Application filed by the Operational Creditor is complete in all respect. This authority is satisfied that an amount of ₹ 63,36,049/- towards unpaid invoices for the material supplied by the Operational Creditor, is due and payable by the Corporate Debtor to the Operational Creditor, which it failed to pay. Moreover, after reply to the Section 8 notice, the Corporate Debtor has not appeared to defend this application giving rise to the presumption that the case of the Applicant is to be admitted - Application admitted - moratorium declared.
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2021 (5) TMI 498
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - pre-existing dispute or not - HELD THAT:- The Operational Creditor has established the existence of debt and default on the part of the Corporate Debtor. The Corporate Debtor's plea of Consultancy agreement being void ab initio and error in computation of default amount does not stand any merit along with that, no documentary evidence substantiating the Corporate Debtor's plea regarding pre-existence of dispute in relation to non-performance of agreement was annexed in the reply. Furthermore, the Corporate Debtor's plea that a civil or Criminal litigation against Operational Creditor has already been initiated has not been substantiated with any relevant document. Hence, the Corporate Debtor fails to establish any pre-existence of dispute and in view of the above situation, this Tribunal admits this petition and initiates CIRP on the Respondent with immediate effect. Application admitted - moratorium declared.
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2021 (5) TMI 494
Fresh claim after approval of Resolution Plan - Consequence of Award in the arbitration proceedings - petitioner s case is that by reason of the subsequent developments after the impugned Award, the application for setting aside of the Award is not maintainable any more - HELD THAT:- The contentions of the respondent with regard to the principles of res judicata applying to different stages of the same proceedings must therefore be read down in fit cases where orders are capable of being altered or varied on the emergence of new facts or situations. The principle essentially is to guard the court from abuse of process where the same matter in issue, which had been heard and finally decided by a court, is urged again between the same parties. This is unlike the present case as the question of maintainability of the application under Section 34 of the 1996 Act can be considered at any point of time on the legal aspect and particularly on the pronouncement of a decision relevant to the matter. In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] , the Supreme Court held that a Resolution Plan, once approved under Section 31 of the IBC, is binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders. In the present case, from the date of the admission of the application of initiation of the CIRP against the petitioner namely 18th September, 2017 until approval of the resolution plan on 16th May, 2018, the respondent, as an Award-holder had sufficient opportunity to approach the NCLT for appropriate relief. Second, the amount demanded by the respondent/ Award-holder as on 31st March, 2014 featuring in the Information Memorandum does not really help the respondent since the IBC and the CIRP regulations provide for specific procedural provisions for submission of claims (Ref: Regulations 7 and 12 read with Form B of the Schedule to the CIRP Regulations, 2016). The Award-holder hence was under an obligation to take active steps under the IBC instead of waiting for the adjudication of the application under Section 34 of the 1996 Act. Whether the respondent could have lodged and pursued its claim before the NCLT when the impugned Award was challenged by the Award-debtor/petitioner in this Court on 31st October, 2008? - HELD THAT:- The merit of the stand taken must be seen in the light of Section 36 which has been modified and added by the 2016 amendment. The new Section 36 and sub-section (2) thereunder requires the Court to grant an order of stay of the operation of the Arbitral Award in accordance with Section 36(3) on a separate application for stay taken out by the Award-debtor. Section 36(2) marks a significant departure from the erstwhile provision in clarifying that filing of an application for setting aside of an Award under Section 34 shall not by itself make the Award unenforceable unless the Award is stayed by an order of Court in an application made in the manner provided under Section 36(3) of the Act. The view of the Supreme Court as crystallized in Essar is that pre-existing and undecided claims which have not featured in the collation of claims and consequent consideration by the Resolution Professional shall be treated as extinguished upon approval of the Resolution Plan under Section 31 of the IBC. This can be seen as a necessary and an inevitable fallout of the IBC in order to prevent, in the words of the Supreme Court, a hydra head popping up and rendering uncertain the running of the business of a corporate debtor by a successful resolution applicant. In essence, an operational creditor who fails to lodge a claim in the CIRP literally missed boarding the claims-bus for chasing the fruits of an Award even where a challenge to the Award is pending in a Civil Court. Petition disposed of as being rendered infructuous.
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2021 (5) TMI 475
Payment of additional litigation cost - scope of Resolution Plan - challenge to the Resolution as passed by the CoC to meet the expenditure in relation to the additional litigation costs out of the amounts payable to the related party, the Applicant being one of them, however, not being provided in the Resolution Plan - HELD THAT:- There are no force in the contention of the 1st Respondent that the CoC has passed a resolution in its 9th CoC Meeting dated 24.06.2019 that additional litigation cost is required to be met out of amounts due and payable to the related party financial creditors like the Applicant herein and that the said expenses are required to be defrayed by the said related party financial creditors out of the amounts due to them. If that were so, the same should have been included in the resolution plan itself, which was placed before the Adjudicating Authority for its approval. There cannot be any open end in relation to the resolution plan and its implementation as sought to be portrayed by the 1st Respondent erstwhile Resolution Professional. If the CoC and RP had not factored the cost in relation to additional litigation and provided for it and having failed to include the same as it should have been included in the resolution plan, the said additional expenditure at a later stage (i.e.,) after approval of the Resolution Plan cannot be mulcted on the related party financial creditors. By virtue of the provisions of IBC, 2016 (i.e.,) Section 21 of IBC, 2016, they are also not part of the CoC and hence could not have raised any objections in relation to the same being disabled from the participation in the CoC Meeting and its deliberations. The 1st Respondent also fairly concedes the additional litigation expenses had not been provided in the Resolution Plan. The amount which is payable to the Applicant is required to be paid out of the total resolution plan amount provided for the stakeholders in a sum of ₹ 28,55,06,654/- by the 1st Respondent without any demur within a period of 90 days from the date of this Order - Application allowed.
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2021 (5) TMI 474
Liquidation of Corporate Debtor - Section 33(1)(a) of Chapter III of IBC, 2016 - HELD THAT:- Since, in the 1st CoC meeting held on 03.08.2020, the Committee of Creditors has deliberated about the current affairs of the Corporate Debtor by taking into consideration that there are no movable or immovable assets in relation to the Corporate Debtor and also keeping in view of the fact that the Corporate Debtor is not running its business and based on its commercial wisdom has decided to liquidate the Corporate Debtor, by taking into consideration the provisions of Section 33 of IBC, 2016 and in the absence of any opposition to the Application from the Promoters of the Corporate Debtor and also guided by the decision of the Hon'ble Supreme Court in the matter of K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] this Tribunal orders for the liquidation of the Corporate Debtor. The Corporate Debtor are allowed to be liquidated - application allowed.
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2021 (5) TMI 472
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of dues - here the applicant is Corporate Applicant - main matter against the applicant has been filed under section 7 of IBC, 2016 - HELD THAT:- It is clearly evident from the bare perusal of the section 10(3) (a) of IBC, 2016, that it deals with the 'Corporate Applicant' whereas, the applicant in the present application is 'Corporate Debtor' in the main matter i.e., IB-1772/ND/2019 along with that the main matter has been filed under section 7 of IBC, 2016 not under the section 10 of IBC, 2016. Hence, it is clearly evident that the application has been filed under section 10(3)(a) of IBC, 2016 whereas the main matter against the applicant has been filed under section 7 of IBC, 2016, meaning that the applicant is not the Corporate Applicant in the main matter. Thus, the present application is not maintainable and no direction prayed in the present application can be granted to the applicant. Application dismissed.
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Indian Laws
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2021 (5) TMI 495
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - disputed cheque was drawn for discharging the whole and/or part such debt or other liability - rebuttal of presumption - HELD THAT:- The petitioner in this case, did not raise any probable defence which would create doubts in the mind of the Court. He did not deny the fact that he had taken loan from the complainant. His defence as made out in his examination under Section 313 Cr. P.C is that he has repaid the loan. The issuance of the impugned cheque by him and the fact that the cheque was dishonoured for insufficiency of fund in his account also stand proved. In the present case, the trial Court as well as appellate Court have come to the conclusion that the accused had taken loan from the complainant for which he issued the impugned cheque which was dishonoured by bank for insufficiency of fund in his account. The signature of the accused petitioner on the impugned cheque has been proved. The accused did not lead any evidence to rebut the presumption taken by the Courts below under Section 139, N.I Act. He did not even come in the witness box to support his case. There are no reason to interfere with the conviction of the petitioner under Section 138, N.I Act - In so far as his sentence is concerned, the trial Court, as stated, has convicted the petitioner to rigorous imprisonment for one year and also a fine of ₹ 2,00,000/- which is twice the amount of the impugned cheque. Said sentence of the petitioner has also been upheld by the appellate Court. While upholding his conviction, it is directed that convict petitioner shall pay fine of ₹ 1,50,000/- at the trial Court within 2(two) months from today which on realisation be paid to the complainant, failing which accused petitioner will suffer Simple Imprisonment for six months. The criminal revision petition is thus partly allowed.
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2021 (5) TMI 492
Freezing of Bank Accounts of petitioner - online gambling - shell companies - HELD THAT:- Initially the Investigating Officer has opposed defreezement of the account on the ground that the petitioner has not co-operated with the Investigating Officer by furnishing information and documents as sought by him in concluding investigation in Crime No.1432 of 2020. During pendency of the present petition and also in view of the orders passed by this Court, the petitioner herein has co-operated with the Investigating Officer by furnishing the information and documents as sought by him. Thus, the Investigating Officer has completed investigation and filed charge sheet. But, the learned Public Prosecutor did not file copy of the said charge sheet in the present criminal petition. Considering the said aspects, according to this Court, no useful purpose would be served in continuation of freezing of account of the petitioner company. According to this Court, the relief sought by the petitioner in defreezement of its account can be considered on imposition of certain conditions. In the latest written instructions, the Investigating Officer mentioned that they have already completed investigation and filed charge sheet in the said crime. It is found that multiple purchase orders were mentioned which belong to Indian Companies across India. The credentials of all the said companies need to be verified - It is also relevant to mention that during the course of arguments, the learned Public Prosecutor has submitted that at the address of the petitioner company mentioned by it in the ROC records, which is in the State of Maharashtra State, it was locked and there is no one including Director or responsible person to cooperate with Investigating Officer by furnishing the information and documents to conclude the investigation. Admittedly, the account of the petitioner which was freezed is in HSBC, Gurugram. In the event of defreezing the said account of the petitioner without any condition, it would be difficult for the police or trial Court to take further steps in accordance with law since the police have to verify the credentials of the said companies including the petitioner company and several other crimes registered by the police with regard to the very same online betting are pending investigation. Therefore, this Court is inclined to impose certain conditions while considering the relief sought by the petitioner to defreeze its account. Criminal Petition is allowed.
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2021 (5) TMI 489
Dishonor of Cheque - inter-corporate loan (in the form of deposit) given to petitioner being one of the Directors - HELD THAT:- The underlying position is that an amount worth of ₹ 50 Lakh was advanced to petitioner/debtor beneficiary in the form of an inter-corporate deposit, upon certain agreed terms, simply to tied over the financial cricis faced by the RMPL, of which petitioner is one of the directors. Such amount was indisputably credited to the bank account of RMPL, maintained at HDFC bank. On the selfsame date of credit of inter-corporate deposit, an amount worth of ₹ 50 Lakh was diverted to a S.B.I. account maintained separately by the petitioner/beneficiary - Mr. Banjeree never disputed with the amount of inter-corporate deposit, and thus he was honest in his submission as regards the liability of the petitioner, he had with respect to the debt already incurred by petitioner in the form of inter-corporate deposit. A separate case under Section 138 of Negotiable Instruments Act is also pending against the petitioner. The settled proposition of law is that though there is civil remedy available in connection with a commercial transaction, but there is no legal impediment to launch a separate prosecution under Section 138 of N.I. Act, subject to the fulfilment of the ingredients constituting such offence, which is indeed different from the instant one, where fraudulent and dishonest intention on the part of the accused/petitioner are the essence of offence, complained of. Therefore, the instant prosecution is very much permissible and with the sanction of law. The instant revisional application fails being without any merits.
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