Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 20, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Standard Operating Procedure (SOP) for implementation of the provision of extension of time limit to apply for revocation of cancellation of registration under section 30 of the CGST Act, 2017 and rule 23 of the CGST Rules, 2017 - CGST - Circular
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Violation of principles of natural justice - validity of ex-parte assessment orders - no doubt in my mind that there is total non-application of mind on the part of the 1st respondent in passing the impugned order of assessment, dated 07.02.2020. In the considered opinion of this Court, the petitioner is entitled to be heard in person, before the order of assessment was made. - HC
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Transitional input tax credit - Request for availing transitional credit rejected on the ground that the tax payer has no technical glitches in filing TRAN-1 as per the system logs - Revenue appeal dismissed - While dismissing the present writ appeal, 30 days time is granted to the assessees to submit their GST TRAN-1 from today - HC
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Detention of goods u/s 129(1) of CGST Act - Invoice number mentioned in Tax invoice not tallied with E-way bill - it is very much clear that the action of the authorities in collecting the tax either on the spot or later, can always be challenged subsequently by questioning the jurisdiction or their authority to collect tax - this Writ Petition is allowed, holding that the Respondents were in error in collecting the tax and penalty from the Petitioner, for release of the goods seized. - HC
Income Tax
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Disallowance of expenditure on assets transferred to work in progress - assessee has also legal obligation to provide parking spaces to buyers of shopping complex. In view of this, we direct the assessing officer to delete disallowance on account of parking space provided to shop owners/office owners of the mall. - AT
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Income from house property - allowability of society maintenance chares’ from rental income - to say that the actual rent received by the assessee was net of ‘society maintenance charges’, would not be correct as per the terms of the agreement entered into by the assessee. - AT
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Unexplained Money addition under Section 69A - Where the basis for making the addition in the hands of the buyer has been held as inadmissible and unsustainable, the addition made in the hands of the assessee HUF solely relying on the additions in the hands of the buyer does not sustain and the same has to be deleted, particularly, in view of the fact that the said valuation report has not been found from the possession of the assessee - AT
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Levying penalty u/s. 272A(2)(k) - Filing the return belatedly - There may have been procedural lapse on the part of the assessee however, due to such procedural lapse no prejudice has been caused to the Revenue. This fact has also been admitted by the Ld. DR. - The provisions of Section 272A(2)(k) are subject to provisions of section 273B of the Act and hence, the relevance of reasonable cause has to be established. - AT
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Addition u/s 68 - onus to prove the identity, creditworthiness and genuineness of the share applicants - Both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. - the addition made by the AO and sustained by Ld CIT(A) was based on conjectures and surmises, so it cannot be justified - AT
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Long Term Capital Gain OR Short Term Capital - period of holding - inclusion of period of tenancy - The word 'held' as per dictionary meaning means to possess, be the owner, holder or tenant of property, stock, land, etc. - the assessee was occupying the asset for more than the qualifying period of 36 months and on assigning the right in the property, the gain earned is certainly qualified for LTCG. - AT
Customs
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Adjudicating SCN after long gap of 11 years - Matter was kept pending - Clearly, the Revenue has thoroughly failed to justify its lapse for not adjudicating the Demand Notice dated 2.8.2007 for more than 11 years. Quite apart, as is discernible from the contents of paragraph 3.3 of the reply, during the shifting of the office, papers pertaining to the Demand Notice dated 2.8.2007 are not traceable. - Thus, allowing the Revenue at this stage to proceed with the adjudication of the notice dated 2.8.2007, would be an exercise in futility, in breach of the principles of natural justice and against the principle laid down by this Court. - HC
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Extension of two years of Export Obligation period with a further request to prospectively grant it for two years - Once having extended the period on 27.11.2018, without availing the opportunity, the grant of extension of Export Obligation period, cannot be cancelled. However, if there are certain suspicious documents noticed by the DRI, the authority concerned, if has chosen to suspend the same and has sought the detail from the petitioner, no interference is desirable. If the petitioner is given a clean chit in the proceedings of the show cause notice, it may request the concerned authority to consider the case of extending the Export Obligation period which has been suspended presently and it would be for the authority to consider such a request at an appropriate time - HC
Indian Laws
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Principles of natural justice - Since it has come on record through Ext.P7 itself that the petitioner was served with Ext.P6 notice, only on 24.03.2021, which contained the stipulation that he is given 15 days time, it was necessary to grant such period of time to file objections. Passing an order without complying with the period of time stipulated in Ext.P6 notice amounts to violation of natural justice. - HC
IBC
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Initiation of CIRP - Petitioner are Homebuyers - In the instant case, the Petitioners have already obtained order from the relevant forum under the RERA Act and the same can be executed before relevant forum. A case under the Code, 2016 is not made out as the petition is clearly an attempt to substitute the recovery mechanism and amounts to forum shopping. Further, since the Petitioner does not meet the minimum threshold of 10% of Financial Creditors of the same class, the petition fails and deserves to be dismissed.- Tri
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Initiation of CIRP - Operational Creditors - existence of debt and dispute or not - This petition has been filed to recover disputed debt, which is not the object of the Code, treating this AA as a debt recovery forum. An undisputed debt is a sine qua non for an application filed u/s. 9 of the Code. Allowing such a petition against a profit-making viable unit would defeat the purpose of the Code - Tri
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Initiation of CIRP - The default and its consequences clearly provide that nonpayment of interest towards outstanding NCDs is an 'event of default' and the Debenture Trust Deed recognizes that in case there is an 'event of default', the Petitioners/Debenture Holders are entitled to recover the money paid towards the NCDs. Therefore, the Bench notes that in this case an 'event of default' has occurred in terms of Clause 8.8 of the Debenture Trust Deed when accrued interest was not paid when it became due and payable and therefore the Corporate Debtor was entitled to redeem the NCDs. - Tri
Central Excise
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Abatement of duty - closure of the production activity at the unit was not for a continuous period exceeding 15 days - In absence of any allegations by the department and any material on record suggesting that despite sealing the assessee operated the machine, it would not be permissible to withhold the abatement of duty only on the ground that the Superintendent of Central Excise did not draw proper proceedings and did not elaborately record that the sealing was done in such a manner that the machine could not be operated. - HC
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Compliance with the requirement of pre-deposit - Section 35F of the Central Excise Act, 1944 - To Consider the amount deposited during investigation as pre-deposit - petitioner may obtain a certificate from the jurisdictional officer or Supt of Central Excise to the effect that the amount of ₹ 2.32 Crores paid by the petitioner has not been adjusted against any of the duty liability or refunded back to the petitioner - If such certificate is obtained, such certificate shall be produced before the Registry of the first respondent Tribunal - HC
Case Laws:
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GST
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2021 (5) TMI 601
Violation of principles of natural justice - validity of ex-parte assessment orders of the 1st respondent - Section 75(4) and 126(3) of the TNGST Act - HELD THAT:- The impugned order of assessment has been passed on 07.02.2020, whereas personal hearing has been on 03.12.2020, after much latter the impugned order of assessment made, which clearly shows non-application of mind on the part of the 1st respondent. Even the Deputy Commissioner (ST)(Int), Madurai, has filed an appeal under Section 107 of TNGST Act, before the Appellate Deputy Commissioner (Appeal), Goods and Service Tax, Madurai, as against the above said assessment orders passed by the 1st respondent, dated 07.02.2020, pointing out certain deficiency. In such view of the matter, no doubt in my mind that there is total non-application of mind on the part of the 1st respondent in passing the impugned order of assessment, dated 07.02.2020. In the considered opinion of this Court, the petitioner is entitled to be heard in person, before the order of assessment was made. The matters are remanded back to the 1st respondent to pass fresh orders, after affording an opportunity of personal hearing to the petitioner - Petition allowed by way of remand.
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2021 (5) TMI 599
Intermediaries helped in rotating the money between the buyers and sellers of various goods and services - Sections 420, 467, 468 and 471 read with Section 120(E) IPC and Sections 132 (1) (i) read with Section 132(1) and (f) of the APGST Act, 2017 - HELD THAT:- The investigation in this complaint may go on. However, no coercive steps will be taken against the petitioners including arrest as and when they appear before the Investigating Officer on 22.04.2021 by petitioner NO.2 and 24.04.2021 by petitioner No.l or such further dates without obtaining further orders from this Court. Post on 05.05.2021, in the motion list. 2440/2021
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2021 (5) TMI 598
Transitional input tax credit - Request for availing transitional credit rejected on the ground that the tax payer has no technical glitches in filing TRAN-1 as per the system logs - HELD THAT:- The writ appeals preferred by the Union of India have been dismissed. However, as the period to file TRAN-1 has been expired on 30.08.2020, the respondents-assessees were granted time to file/revise TRAN-1 up to 31.03.2021, meaning thereby more than six month s time was granted to the assesses therein. While dismissing the present writ appeal, 30 days time is granted to the assessees to submit their GST TRAN-1 from today - Appeal dismissed.
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2021 (5) TMI 593
Detention of goods under Section 129(1) of CGST Act - Invoice number mentioned in Tax invoice not tallied with E-way bill - HELD THAT:- The issue some what identical to the case on hand came up for consideration before the Division Bench of this Court in ANNAM JEWELLERS VERSUS DEPUTY COMMERCIAL TAX OFFICER AND ANOTHER [ 1996 (3) TMI 492 - ANDHRA PRADESH HIGH COURT] . In the said case, the Writ Petitioners were engaged in the business of gold and silver articles. The premises was inspected by the 1st Respondent, and on verification of the stocks, the inspecting authority got recorded statements from the writ petitioners to the effect that the petitioners were liable to pay tax under Section 6A of the Andhra Pradesh General Sales Tax Act, 1957, and accordingly, collected the tax as well as the penalty, which was five times that of the tax payable and the amount was collected by way of cheques. Later on, the action of the authority was challenged on the ground that the same is arbitrary and violative of principles of natural justice, and that no notice and opportunity was given to the dealers and no assessment was also made. Thus, it is very much clear that the action of the authorities in collecting the tax either on the spot or later, can always be challenged subsequently by questioning the jurisdiction or their authority to collect tax - this Writ Petition is allowed, holding that the Respondents were in error in collecting the tax and penalty from the Petitioner, for release of the goods seized.
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Income Tax
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2021 (5) TMI 604
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax - application is to grant exemption from filing court-fee and welfare stamp - beneficial interest in the shares - foreign asset - HELD THAT:- Insofar as the knowledge of the AO is concerned, it is the case of the revenue that it became aware of the foreign asset, said to have been held by the petitioner, via the Foreign Tax and Tax Research (in short FT and TR ), division of the CBDT. Thus, we would like to have on record, the documents and the information, that FT and TR had in its possession, to enable us to fix a date of knowledge and, if at all, the provisions of the Act would apply in this case. We are of the view, to get to this point, the date of knowledge of FT and TR would be relevant. These aspects can only be examined once a counter-affidavit is filed on behalf of the revenue. We may also note that there are several other issues that have been raised, in the petition. Accordingly, issue notice.
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2021 (5) TMI 594
Provisions for NPA's debited to P L Account - Deduction for provision for bad and doubtful debt u/s 36(1)(viia) - Tribunal held that though the assessee has used the nomenclature as provision for non performing assets but in pith and substance, the provision has been created for bad and doubtful debts and in doing so the assessee has followed the guidelines framed by Reserve Bank of India as affirmed the finding recorded by the Commissioner of Income Tax (Appeals) - HELD THAT:- This court in Canfin Homes Ltd. [ 2011 (8) TMI 178 - KARNATAKA HIGH COURT] after taking note of Section 145 of the Act has held that once a particular asset is shown as non performing asset then the assumption that it is not yielding any revenue. When an asset is not yielding any revenue, the question of showing that revenue and paying tax would not arise. The contentions, which are sought to be raised by learned counsel for the revenue do not arise for consideration in the context of substantial question of law, which has been framed by this court. The concurrent findings have been recorded by the Commissioner of Income Tax (Appeals) as well as tribunal in this regard, which cannot be termed as perverse. Decided in favour of the assessee.
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2021 (5) TMI 591
Exemption u/s 11 - issue of eligible of the registration under section 12A of the Act has not attained finality - CIT-A allowed deduction - HELD THAT:- We do not find it necessary to delve into issue raised in these years again, as the Tribunal on similar set of facts in the assessee s own case examined the issue, and allowed claim of the assessee; wherein one of us (Vice-President) was party and author. It is pertinent to mention that, the issue of charitable status of the assessee and allowance of exemption under section 11 has been accepted by the department consistently for the last more than 20 years. In the Asstt.Year 2011-12, when the claim of the assessee rejected by the Department, the same was challenged before the Tribunal, and the Tribunal [ 2018 (3) TMI 48 - ITAT AHMEDABAD] after detailed discussion allowed the claim of the assessee and confirmed by the Hon ble High Court [ 2018 (9) TMI 1097 - GUJARAT HIGH COURT] . The factum of dismissal of appeal of the Revenue for earlier years on the similar issue upto the level of Hon ble Supreme Court [ 2019 (4) TMI 379 - SC ORDER] has not been disputed by the Department. Therefore, the issue attained finality. No material has been brought on record by the ld.DR to demonstrate that the view taken by the Tribunal in the earlier years was on the different set of facts. Admittedly, there is no change in facts and circumstances as compared to the previous years and subsequent years, and therefore, principle of consistency squarely applicable to the present case on hand. Therefore we AO to treat the assessee as a charitable institution and allow exemption under section 11. Decided against revenue.
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2021 (5) TMI 590
Disallowance of expenditure on assets transferred to work in progress - looking at the accounting treatment assessee has claimed this amount as deductible expenses - as per assessee cost of parking space for shops already sold cannot be carried on in work in progress but has to be charged to the profit and loss account and therefore the value of this land has not been carried in work in progress at the end of the year - HELD THAT:- Assessee has met its obligation by providing a plot of land to be used as a parking space by the shop owners and therefore the assessee is entitled to claim deduction of the cost of land given for parking space. Even after passing of almost a decade, the assessee has not sold that plot of land, which was used as a parking space by the shop owners. Even if it would be sold at any later point of time by the assessee, as assessee is a legal owner, the necessary profit is required to be charged to tax. In fact in the present case the full consideration received by the assessee would be income of the assessee as assessee has already taken the cost of the plot as a deduction u/s 37 (1) or u/s 28 of the income tax act. By providing the plot of land assessee has incurred a cost of the project for providing the parking space to the shop owners, which was a commercial obligation on the assessee, the above cost is required to be granted as deduction to the assessee. Whether there was any legal obligation on the assessee for providing a parking spaces is also established as the assessee was granted permission to construct shopping mall only if it had a proper parking facility as per HUDA Rules. Thus assessee has also legal obligation to provide parking spaces to buyers of shopping complex. In view of this, we direct the assessing officer to delete disallowance on account of parking space provided to shop owners/office owners of the mall. Therefore, we reverse the orders of the lower authorities and allow the appeal of the assessee.
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2021 (5) TMI 589
Income from house property - allowability of society maintenance chares from rental income - as urged that gross rent received by the assessee included society maintenance charges which were to be paid by the assessee, thus in computing the annual value, the amount of rent which actually goes into the hands of the owner should be taken into consideration since the provisions of Sec. 23(1)(b) uses the expression actual rent received or receivable by the owner - AO opined that the same is not allowable since the assessee is already allowed deduction of 30% u/s 24(a), consequently, the rental income was taken on gross basis. HELD THAT:- Upon perusal of the agreements, it could be gathered that the payment of municipal taxes and other outgoings was the liability of the assessee. Any increase was also to be borne by the assessee. The licensee was required to pay fixed monthly lump sum payment to the assessee as license fees irrespective of assessee s outgoings. Therefore, to say that the actual rent received by the assessee was net of society maintenance charges , would not be correct as per the terms of the agreement entered into by the assessee. We find that as per the provisions of Section 23(1)(b), annual value shall be deemed to be the actual rent received or receivable by the assessee. The proviso provides for deduction of municipal taxes levied by any local authority. As per Explanation, the actual rent received or receivable would not include the amount of rent which owner could not realize. We find that the statutory provisions are quite clear and provide for deduction of only specified items i.e. taxes paid to local authority and the amount of rent which could not be realized by the assessee, from the expression actual rent received or receivable . No other deduction is permissible. Allowing the other deduction would amount to distortion of the statutory provisions and such a view could not be countenanced. To accept the plea that rent which actually goes into the hands of the assessee is only to be considered, would enable the assessee to claim any expenditure from rent actually received or receivable since the same would ultimately reduce the amount which actually goes into the hands of the assessee. The same is not the intention of the legislatures. The statutory provisions, as noted earlier, provide for deduction of specified items only. Proceeding further, we are of the considered opinion that the society maintenance charges as paid by the assessee, by no stretch of imagination, could be held to be taxes paid to local authority. See TOWNSHIP REAL ESTATE DEVELOPERS (INDIA) (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX-2 (3) [ 2012 (5) TMI 143 - ITAT MUMBAI] - Decided against assessee.
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2021 (5) TMI 588
Penalty u/s.271(1)(c) - Defective notice - addition towards loss on sale of car - case of the assessee is that the AO did not strike off the irrelevant limb in the notice issued u/s.274 r.w.s. 271(1)(c) - HELD THAT:- It is clear that where the charge is not properly set out in the notice u/s 274 viz., both the limbs stand therein without striking off of the inapplicable limb, but the penalty has, in fact, been levied for one of the two, such a penalty order gets vitiated. See MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] and GOLDEN PEACE HOTELS AND RESORTS PVT. LTD. [ 2020 (2) TMI 333 - BOMBAY HIGH COURT] Turning to the facts of the extant cases, we find from the notices u/s 274 of the Act that the AO did not strike out the irrelevant limb there from - Decided in favour of assessee.
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2021 (5) TMI 587
Rectification of mistake u/s 254 - applicability of provisions of Sec.50 in respect of transaction involving transfer of an immoveable property by the assessee has been dismissed by the bench observing that the assessee could not demonstrate that deprecation was never claimed against the said property since its acquisition - AR submitted that during hearing various evidences were submitted in support of the fact that depreciation was never claimed on immoveable property - HELD THAT:- A conclusion was reached that the assessee could not establish that the property was not part of block of asset and depreciation against the same was never claimed in earlier years. The perusal of record would reveal that the assessee had purchased the property on 31/12/2010 and the question of claiming depreciation would arise in AYs 2011-12 onwards. However, except for computation of AY 2013-14, no computation of income for AYs 2011-12 2012-13 was placed on record. Similar was the observation of Ld. CIT(A) in the impugned order. Hence, the observation of the bench in para-4 of the order. Therefore, we do not find any mistake in the order, on this issue. Allowance of property tax and BEST deposit (electricity) - The expenditure was capitalized or not, would not be much germane to decide the deductibility of such expenditure while computing capital gains since the deduction would be available only as per computational mechanism provided in law. These two expenditures could not be said to be part of cost of acquisition or improvement. The issue of deductibility of other expenditure has already been restored back on the facts of the case since the assessee had failed to substantiate the same. No error in the order in terms of Section 254(2). The application stands dismissed.
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2021 (5) TMI 586
Assessment u/s 147 or 153C - search from the premises of a 3rd party - Unexplained Money addition under Section 69A - HELD THAT:- In the present assessee s case, search seizure action u/s 132 of the Act was carried out on 15.10.2009 in the premises of Mr. Abhinav Arora and Mrs. Ranju Arora. Consequently, the Assessing Officer initiated reassessment proceedings u/s 147 of the Act relying upon the information received based on the certain documents found during the course of search from the premises of a 3rd party i.e. Mr. Abhinav Arora and Mrs. Ranju Arora. Thus, the assessment is based upon the documents found during the course of search of 3rd party premises, but that can be made only u/s 153C of the Act. The provision of Section 153C of the Act is attracted when there are any incriminating documents pertaining to the assessee which are found during the search of 3rd party premises. The contention of the Ld. AR that the provisions of Section 153C of the Act are non-obstantive provisions and the same specifically excludes the operation of Sec. 147 of the Act, therefore, the Assessing Officer in the present case has grossly erred in invoking the provisions of Sec. 147, instead of 153C of the Act appears to be correct in legal parlance. When any incriminating documents are found Section 153C is invoked and the same has to be applied by the Revenue authorities as Section 147 has its own separate footing for invoking the provisions. If Sec. 147 is permitted on the basis of documents found in the course of search of 3rd party premises, then the provisions of Sec. 153C of the Act would become redundant. As decided in ARUN KUMAR KAPOOR [ 2012 (6) TMI 403 - ITAT AMRITSAR] held that the notice issued u/s 148 of the Act and the consequent assessment framed u/s 147 of the Act is void-ab-initio as in the instant case, assessment based upon incriminating documents found during the course of search of 3rd party premises can be made u/s 153C of the Act. Thus, the assessment in the present case itself becomes null and void. Where the basis for making the addition in the hands of the buyer has been held as inadmissible and unsustainable, the addition made in the hands of the assessee HUF solely relying on the additions in the hands of the buyer does not sustain and the same has to be deleted, particularly, in view of the fact that the said valuation report has not been found from the possession of the assessee. Besides this, the report of the valuation officer found during search does not specifically set out that differential amount has been received by the assessee. Thus, it can be clearly established that the addition made on the basis of valuation report does not sustain and deserved to be deleted. Therefore, we are allowing the cross objections of the assessee. Since we have allowed the additional grounds of the cross objections and held that the assessment itself is null and void, the appeal of the revenue which is on the merit of the addition does not sustain. Hence, appeal of the Revenue is dismissed.
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2021 (5) TMI 585
STCG or LTCG - transaction of development envisaged in the JDA - HELD THAT:- Having held that no `transfer took place in the year under consideration and hence no capital gain arose, the natural corollary is that the `transfer took place in some other year(s) and the resultant capital gains should be charged to tax in such other years. The case of the assessee is that the `transfer took place in the year 2013, when it transferred the entire land to the eventual buyers and was rightly offered for taxation in such later year, for which protective assessment has also been made by the AO. We find that 80R land was transferred by the assessee to Akash Erectors Pvt. Ltd. in the month of June, 2010, when ULC Act was repealed and the name of the Government of Maharashtra was removed from 7/12 extract between 2009 and 2010. When the assessee transferred 80R land to Akash Erectors Pvt. Ltd., by means of a registered sale deed, it became chargeable to tax pro tanto in the previous year relevant to the A.Y. 2011-12 as it fell within the definition of the term `transfer . AR candidly accepted that no capital gain was offered for such assessment year. In view of the `transfer taking place in such year to that extent, it is held that the resultant capital gain arising on the transfer of 80R land to Akash Erectors Pvt. Ltd. in the year 2010 should be charged to tax on substantive basis in the assessment for the A.Y. 2011-12 subject to the provisions of Chapter IV-E. As regards the balance transfer taking place in the A.Y. 2014-15 as per the assessee s own version, when he transferred the remaining property (after excluding 80R land transferred to Akash Erectors Pvt. Ltd.) to the eventual buyers, namely, Sh. Rajendra Bhosale and Sh. Vikas Shinde pursuant to transfer of land in the year 2013 along with Dabhade family and Akash Erectors Pvt. Ltd., the capital gain should be charged to tax on substantive basis in the A.Y. 2014-15. AO will take into consideration all the amounts received earlier from Samrat Builders and Developers and then from Sh. Rajendra Bhosale and Sh. Vikas Shinde. AO will provide adequate opportunity of hearing to the assessee in determining the correct amount of capital gains for the A.Ys. 2011-12 and 2014-15.
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2021 (5) TMI 584
Levying penalty u/s. 272A(2)(k) - Filing the return belatedly - HELD THAT:- As considered judicial precedents placed on record. In this case penalty has been levied u/s. 272A(2)(k) of the Act due to late filing of TDS statements/returns. However, it is an undisputed fact as admitted by the parties herein, that no loss has been caused to the Revenue by the action of the assessee. There may have been procedural lapse on the part of the assessee however, due to such procedural lapse no prejudice has been caused to the Revenue. This fact has also been admitted by the Ld. DR.The provisions of Section 272A(2)(k) are subject to provisions of section 273B of the Act and hence, the relevance of reasonable cause has to be established. Jaipur Bench of the Tribunal in the case of Argus Golden Trades India Ltd. [ 2017 (6) TMI 234 - ITAT JAIPUR] and Punjab National Bank [ 2011 (5) TMI 831 - ITAT LUCKNOW] has deleted the penalty levied u/s.272A(2)(k) of the Act. Similarly, Delhi Bench of the Tribunal in the case of Haryana Distillery Ltd. Vs. Joint Commissioner of Income Tax [ 2018 (9) TMI 289 - ITAT DELHI] the question arose whether since on filing belated returns/statements, Revenue had not suffered any loss because tax deducted was already deposited on time and there was mere technical or venial breach to provisions contained in Act for submitting return/statements of TDS. Therefore, penalty was not to be levied and question was answered in favour of the assessee.
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2021 (5) TMI 583
TDS u/s 194C - payment made by the AOP to its members - HELD THAT:- We notice that on identical facts and circumstances, the Co-ordinate Bench of the Tribunal in the case of ITO Vs. Shraddha Mahalaxmi Joint Venture and others i[ 2014 (12) TMI 347 - ITAT PUNE] after making reference to the several judicial precedents including the case Swapnil RDS Joint Venture, [ 2014 (12) TMI 320 - ITAT PUNE] has provided relief to the assessee on this issue - Decided against revenue.
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2021 (5) TMI 575
TP Adjustment - adjustments pertaining to corporate guarantees - international transaction u/s 92B - HELD THAT:- We find no merit in assessee's instant legal argument in principle since hon'ble Madras high court's latest decision in Redington India Pvt. Ltd. [ 2020 (12) TMI 516 - MADRAS HIGH COURT] has settled the law that a corporate guarantee indeed forms an international transaction and covered by the Explanation to section 92B with retrospective effect as well. The assessee's first and foremost legal argument fails therefore. Quantification of the impugned corporate guarantee commission - Lumpsum corporate guarantee commission of 0.9% would be just and proper in both the impugned assessment years i.e., A.Ys. 2012-13 and 2013-14. Denying carry forward set-off losses under the head 'capital gains' - HELD THAT:- It transpires during the course of hearing that this tribunal's order in assessee's appeal[ 2016 (9) TMI 1597 - ITAT HYDERABAD] has restored the issue of carried forward of short term losses pertaining to earlier assessment years back to the Assessing Officer. The said order has indeed not been considered in any of the lower appellate authorities' adjudication(s). We therefore proceed on the very line of action in the impugned assessment year as well by adopting judicial consistency and direct the Assessing Officer to verify all the necessary facts in the light of the consequential adjudication in the earlier assessment year(s). Ordered accordingly. This second substantive ground is taken as allowed for statistical purposes. Admission of additional claim - Capital gains addition - Assessing Officer's consequential assessment dt. 30-01-2017 holds that such an additional claim could not be entertained in absence of a revised return as per hon'ble apex court's decision in Goetze (India)[ 2006 (3) TMI 75 - SUPREME COURT] - HELD THAT:- We find no merit in the Revenue's foregoing argument. Their lordships have made it clear in para 4 that the same only applies on the Assessing Officer's jurisdiction to entertain a new claim than impinging upon the appellate authorities' similar jurisdiction to allow the concerned parties to plead new grounds. We therefore direct the Assessing Officer to adjudicate the assessee's impugned capital gains addition grievance on merits as per law within three effective opportunities of hearing.
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2021 (5) TMI 570
Addition u/s 68 - onus to prove the identity, creditworthiness and genuineness of the share applicants - as per revenue assessee fails to explain the nature and source shall be assessed as its undisclosed income - HELD THAT:- Onus shifted to AO to disprove the documents furnished by assessee; and further the AO could not have brushed aside the documents produced by assessee/share subscribers without pointing out any infirmities; and without doing this exercise, the AO could not have drawn adverse view against the share subscribers and therefore, for the same reasons the impugned action of Ld CIT(A) to sustain the addition also cannot be countenanced because the very same exercise the Ld CIT(A) could have resorted to exercising his co-terminus powers, which he did not do. In the absence of any fruitful investigation, much less gathering of evidence by the Assessing Officer/Ld CIT(A), we are of the opinion that addition could not have been sustained merely based on inferences drawn by circumstance/conjectures/surmises. Both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments, confirmation of source of source and fourteen (14) share subscribers scrutiny assessments passed u/s 143(3) out of twenty one (21) share subscribers were placed on AO/Ld CIT(A)'s record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO/Ld CIT(A) and the onus shifted to AO/Ld CIT(A) to disprove the materials placed before him. Without doing so, the addition made by the AO and sustained by Ld CIT(A) was based on conjectures and surmises, so it cannot be justified. In the facts and circumstances of the case as discussed above, no addition was sustainable under Section 68 of the Act. Therefore, the impugned order of Ld. CIT(A) is set aside and the AO is directed to delete the addition and consequently the appeal of assessee stands allowed.
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2021 (5) TMI 567
Long Term Capital Gain OR Short Term Capital - period of holding - assessee was already tenant in the property much prior to execution of the agreement to sale April 1993 - purchase agreement was made in 1993 - conveyance deed was executed as on 08.05.2017 after making payment of final installment as on 27.5.2005 - As per the deed, possession was handed over on 15.7.2006 - HELD THAT:- The Hon ble Punjab Haryana High Court in CIT Vs Ved Prakash sons (HUF) [ 1993 (7) TMI 45 - PUNJAB AND HARYANA HIGH COURT] held from the bare reading of section 2(42A), the word 'owner' has by design not been used by the Legislature. The word 'held' as per dictionary meaning means to possess, be the owner, holder or tenant of property, stock, land, etc. Thus, a person could be said to be holding the property as an owner, as a lessee, as a mortgagee or on account of part of performance of agreement, etc. Conversely, all such other persons who may be termed as lessees, mortgagees with possession or persons in possession as part performance of the contract would not in strict parlance come within the purview of an 'owner'. As per Shorter Oxford Dictionary, 'owner' means one who owns or holds something; one who has the right of claim or title to a thing. In view of the aforesaid factual and legal discussions, we are of the considered view that the assessee was occupying the asset for more than the qualifying period of 36 months and on assigning the right in the property, the gain earned is certainly qualified for LTCG. The submissions of revenue that the assessee was not in possession of the asset or that the right to specific performance accrued only in the year 2005 is not correct being contrary to the contents of various clauses the agreements to sale dated 06.04.1994 and the conveyance deed dated 08th May 2007, which we have discussed above. The assessee possessed the property since long and not from the date of making balance payment in the year 2005. It is settled legal position that the contents of documents should not be read in isolation but as a whole. Grounds of appeal raised by the assessee is allowed.
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Customs
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2021 (5) TMI 596
Adjudicating SCN after long gap of 11 years - Matter was kept pending - Validity of Less Charge Demand Notice - concessional rate of duty - Import of certain second hand equipments, i.e. capital goods/professional equipments - whether the respondent authorities could now be permitted to adjudicate the Demand Notice dated 2.8.2007, more particularly, when no intimation was issued to the petitioner No.1 company communicating about keeping the adjudication of the Demand Notice in abeyance? - HELD THAT:- This Court, in the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 [ 2017 (3) TMI 1534 - GUJARAT HIGH COURT] has in detail held and observed that where the department has kept the proceedings in call books, it would be impermissible for the department to reactivate the same after years together and more particularly, when the noticee has not been informed or communicated about transferring the matter to the call book and therefore, the action would be in breach of the principles of natural justice. Clearly, the petitioners by this petition, have challenged the Demand Notice dated 2.8.2007 mainly on the ground that after the issuance of said notice, no steps worth the name have been taken by the respondent authorities for adjudicating the said notice. Perceptibly, not a single communication has been addressed by the respondent to the petitioners, intimating it about keeping the show-cause notice in abeyance. Furthermore, in the reply filed by the respondent, limited explanation is offered in paragraph 3.3 to the effect that due to reorganization of the department, shifting of the office documents have taken place, and during such shifting, the documents might have been misplaced. It is further averred that the office has tried to find out the documents related to the concerned Demand Notice dated 2.8.2007, however, the same are not traceable. Clearly, the Revenue has thoroughly failed to justify its lapse for not adjudicating the Demand Notice dated 2.8.2007 for more than 11 years. Quite apart, as is discernible from the contents of paragraph 3.3 of the reply, during the shifting of the office, papers pertaining to the Demand Notice dated 2.8.2007 are not traceable. Thus, allowing the Revenue at this stage to proceed with the adjudication of the notice dated 2.8.2007, would be an exercise in futility, in breach of the principles of natural justice and against the principle laid down by this Court. The demand notice quashed - petition allowed.
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2021 (5) TMI 595
Extension of two years of Export Obligation period with a further request to prospectively grant it for two years - whether the extension as sought for of the authorisation needs to be given to the petitioner in wake of the pendency of the show cause notice dated 05.03.2019 and in total set of facts and circumstances? HELD THAT:- Challenge in this petition is to this suspension of amendment sheet No.3, which had extended two years of Export Obligation period with a further request to prospectively grant it for two years. We could notice that the suspension on the part of the respondent authority is in wake of non-fulfillment of the directions on the part of the petitioner to the communication dated 24.12.2018. After nearly a month from the non-compliance on 22.01.2019, there had been a suspension of the amendment sheet No.3 dated 27.11.2018. It is to be noted that this communication clearly speaks of the suspension if not the cancellation or rejection of grant of the extension of the Export Obligation. This had come in wake of the inputs received from the DRI. The show cause notice pursuant to the said search operation and subsequent to the suspension of this is already given on 05.03.2019. Any indulgence on the part of the Court at this stage, would amount to entertaining the matter and indulging into the merit at the stage of show cause notice, which is impermissible. Once having extended the period on 27.11.2018, without availing the opportunity, the grant of extension of Export Obligation period, cannot be cancelled. However, if there are certain suspicious documents noticed by the DRI, the authority concerned, if has chosen to suspend the same and has sought the detail from the petitioner, no interference is desirable. If the petitioner is given a clean chit in the proceedings of the show cause notice, it may request the concerned authority to consider the case of extending the Export Obligation period which has been suspended presently and it would be for the authority to consider such a request at an appropriate time, if the factual circumstances based on the substantive material eventually tilt in favour of the petitioner. This petition deserves no merit and consideration, and stands dismissed.
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Corporate Laws
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2021 (5) TMI 603
Grant of Bail - in-action on part of the Court in taking cognizance - Contention is that provision of Section 167 Cr.P.C. itself is ample clear and default bail can only be granted in case charge sheet/complaint was not filed within the stipulated period - sum and substance of the investigation conducted in the matter and the facts mentioned in the complaint for prosecution are that concerned Companies were engaged in fraudulent merchantine trade and caused wrongful loss to the Public Sector Banks to the tune of ₹ 7820 Crores approximately applying different modus operandi including siphoning of Bank funds through merchantine trade. HELD THAT:- It is admitted fact in the present matter that the applicant has not moved regular bail application before the court below. Only default bail application was moved and same was rejected by the court below. Thereafter present bail application has been moved before this Court taking recourse to the provisions of Section 439 and 167 Cr.P.C. It is true that provision of Section 212 Cr.P.C. has not been mentioned in the bail application but on this technical ground alone prayer made by the applicant to consider the bail application on regular side cannot be rejected - preliminary objection raised on behalf of the S.F.I.O. cannot be accepted, particularly, keeping in view the pandemic situation arose in the country and non regular functioning of the subordinate courts. Submissions made by the learned counsel appearing for the applicant and disclosed in the written submission regarding the application of provisions of Section 167 (1), Section 167 (2) and Section 309 Cr.P.C. are not liable to be accepted. If the prosecution had filed complaint/police report within the period of sixty days, the right of default bail would not accrue in favour of the accused person as has been held by the Apex Court consistently in several cases and is being followed by the Courts till today. Construction of provisions of Section 167(2) Cr.P.C. in the manner submitted by learned counsel appearing for the applicant is not permissible and is not akin to the settled legal proposition. Remand could continue under Section 167(2) Cr.P.C. even after filing of complaint / charge-sheet despite this fact that cognizance had not been taken on the complaint. It is admitted case of the applicant that he moved default bail application on 18.05.2020. Since complaint had already been filed on 15.05.2020 and sixty days period was to be expired on 17.05.2020, therefore, default bail was not liable to be allowed. The amount involved in the matter which has become N.P.A., the court is of the view that no case for regular bail is made out - prayer for regular bail is also hereby rejected.
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2021 (5) TMI 580
Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013, and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements And Amalgamation) Rules, 2016 - HELD THAT:- From a perusal of the material brought on record, it appears that the Scheme of Amalgamation is fair, reasonable and is not detrimental to the Members or Creditors or contrary to public policy. Further, as per the Petition, the Scheme in question will enable in enhancing the brand value, having a larger net worth base, greater borrowing capability and increasing competitive edge over competitors and the management to consolidate business of both Transferor and enable future growth and more efficient treasury management, etc. On a consideration of the facts of the case as mentioned in the preceding paragraphs, which are not being elaborated here to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of Transferor Companies and the Transferee Company, is hereby sanctioned. The Scheme of Amalgamation is hereby sanctioned - application allowed.
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2021 (5) TMI 569
Winding up the Respondent Company - Section 271 (c), (d) and 272(3) of the Companies Act, 2013 - HELD THAT:- The affairs of the company have been conducted in a fraudulent manner, the persons concerned in the formation or management of its affairs have been found guilty of fraud, misfeasance or misconduct in connection therewith and that the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years. Hence it is found proper that the Company be wound up in the interest of justice and as prayed. The Official Liquidator attached to the Hon ble High Court, Guwahati is appointed as the Liquidator for winding of the Company, Saradha Realtors Pvt. Ltd., with directions to take immediately the possession of the assets and properties along with the books of Accounts of the Company - Application allowed.
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2021 (5) TMI 568
Seeking for hearing the application dated 09.03.2016 filed by the present application for recall of impugned order - HELD THAT:- There are no merit in the prayers made in this IA 28/2020 for recalling of the above impugned order and keep abeyance of the main proceeding - Hence, both the prayers of the Petitioner here are rejected and the IA 28/2020 is hereby disposed of so as to no cost. Considering the powers conferred on NCLT relating to the issues of Oppression and Mismanagement of the Company Affairs, this Bench may be constrained to take suo motu cognizance of the Management/Affairs of the Company and pass appropriate order on merit to ensure Compliance of Corporate Governance Guidelines of the Companies Act and justice to the Stakeholders before entering into the 22 years of the petition since filed.
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Insolvency & Bankruptcy
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2021 (5) TMI 582
Initiation of CIRP - Petitioner are Homebuyers - Petitioner does not meet the minimum threshold of 10% of Financial Creditors of the same class - existence of debt and dispute or not - Respondent charged higher price of the changed apartment than the earlier one, which was not accepted by the Applicants and hence no agreement was signed for the same. - RERA directed the Corporate Debtor to refund the amount of ₹ 21,94,222/- with interest @ 9% per annum - The Corporate Debtor failed to comply with the order passed by the K-RERA HELD THAT:- As per the insolvency and Bankruptcy Code, (Amendment) Ordinance, 2019 dated 28.12.2019 the financial creditors who are homebuyers of Real Estate Project can file a petition under section 7 of the Code, 2016, jointly only if there are 100 of such homebuyers or if they are 10% of total homebuyers whichever is less. However, in the instant petition, only 2 Homebuyers have filed the case which neither amounts to 10% of the total class of financial creditors or 100 Financial Creditors and therefore this petition cannot be entertained. In the instant case, the Petitioners have already obtained order from the relevant forum under the RERA Act and the same can be executed before relevant forum. A case under the Code, 2016 is not made out as the petition is clearly an attempt to substitute the recovery mechanism and amounts to forum shopping. Further, since the Petitioner does not meet the minimum threshold of 10% of Financial Creditors of the same class, the petition fails and deserves to be dismissed. Petition dismissed.
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2021 (5) TMI 581
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Petitioner has not provided any material to establish insolvency of the Respondent company. The master data details of the Respondent company available on the MCA website show that the company is active and compliant and has no pending charges on assets showing a good working condition of the company. In the absence of specific data regarding insolvency of Respondent, we are unable to determine that the company is insolvent, which is the main reason to push a company into the rigours of the CIRP. If the non-repayment of debt is not because of insolvency, but rather due non fulfilment of business commitment by the other side, then the Petition remains one only seeking recovery, treating this AA as a debt recovery forum, which is not permissible. Also, an undisputed debt is a sine qua non for initiating any process u/s. 9 of the Code. The impact of the present financial distress caused by the global novel corona virus pandemic necessitating a nationwide lockdown, cannot be ignored. Major decisions have been taken to protect Industry from its effects, to inject economic stimulus and to revive the economy. More specifically, on 24.03.2020 the Legislature increased the minimum threshold of default from ₹ 1 Lakh to ₹ 1 Crore so that the Code is not used merely for recovery of debt. Respondent has raised various reasons why the debt is not paid and at the same time admits liability and seeks more time to pay the same, and also that the Respondent is a going concern, thus in the totality of facts and circumstances including the bad economic scenario prevailing in the country, this is not a case fit for initiating CIRP and that it would be in the interest of justice to allow the Respondent some more time to negotiate with the Petitioner and settle the debt at the earliest. Application disposed of by directing the Respondent/Corporate Debtor to repay the debt or the amount as mutually settled with the Petitioner within a period of six months, failing which, the Petitioner would be at liberty to file a fresh petition for admission.
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2021 (5) TMI 579
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The claim raised with reference to amount due for invoices dated 10.06.2016 and 05.07.2016 amounting to ₹ 7,59,962/- along with an interest on the outstanding due amounting to ₹ 4,00,419/- @ 18% p.a., as per the terms of the invoice from the due date of the invoice till the date of the Demand Notice. It is not the case of Petitioner that debt in question is un-disputed. The Respondent has filed list of various emails exchanged with the Petitioner to show that the debt and default are in dispute. There is a pre-existing and bona fide dispute exists about the claim made by the Petitioner. Apart from pre-existing dispute, the instant Petition is filed to recover such disputed amount rather than to initiate CIRP on justified grounds - the Petitioner failed to make out any case so as to initiate CIRP in respect of Corporate Debtor. Petition dismissed.
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2021 (5) TMI 578
Rejection of claim of financial debt filed by the Applicant with the Resolution professional - section 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Applicant has annexed all the necessary documents required to establish a debt, further, the Applicant has submitted his claim in Form-C within the stipulated period from the public announcement, as per the Code and the Regulations. It is well settled that the date of default/NPA has to be taken as date for ascertaining limitation. The Applicant has rightly taken support from the case decided by the Hon'ble NCLAT, New Delhi in the matter of MR. HARSUKBHAI P. LAKKAD VERSUS BANK OF BARODA (ERSTWHILE DENA BANK) ANOTHER [ 2020 (8) TMI 496 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] in where it was held that the date of default/NPA is to considered for counting the period of limitation under Article 137 of the Limitation Act, 1963. There has been no written acknowledgement of debt, however, the date of NPA being 06.11.2019 has to be considered as the date of default. The claim is therefore well within period of limitation, and hence cannot be rejected for that reason - Further, the annexures include Hypothecation Agreement, Deeds of Guarantee for each of the loans. Acknowledgement of debt is not a prerequisite for a claim to be accepted. What is to be seen is whether there are documents to show that there is a debt which has been defaulted - It is clear from the perusal of the application, and the rejection communications that the Resolution Professional has erroneously rejected the claim of the Applicant. Application allowed.
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2021 (5) TMI 577
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Petitioner has to make a case that there is a clear and undisputed debt, a default and also that the Respondent is insolvent and has lost its ability to pay its debts, the proceedings become mere recovery proceedings which is not intended by the legislature in introducing the I B Code, 2016. From the facts of the case it is seen that the Email dated 08.09.2018 issued by the Respondent to the Petitioner categorically pointing out that the credit note of 15% issued by Petitioner in response to the mail dated 21.03.2018 by Respondent pointing out quality issues of the materials supplied, was not acceptable as the Respondent incurred huge losses - Part payments having been made to the Petitioner, and the withholding of payments are clearly not on account of the Respondent's inability to pay but because of the disputes as seen from the email dated 08.09.2018 which appear to be bonafide, regarding the materials supplied. It is not the object of the Code to push profit making and viable units into the rigours of insolvency resolution especially when the objective in the instant case is only recovery of disputed debt. This petition has been filed to recover disputed debt, which is not the object of the Code, treating this AA as a debt recovery forum. An undisputed debt is a sine qua non for an application filed u/s. 9 of the Code. Allowing such a petition against a profit-making viable unit would defeat the purpose of the Code - Petition dismissed.
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2021 (5) TMI 576
Seeking withdrawal of the application, which was filed by him seeking clarification of the order dated 14.01.2020 passed by this Bench - whether once elected to approach the Hon'ble NCLAT, the Liquidator ought not to have filed another application for seeking clarification of the order? - HELD THAT:- It is true that having once approached the Hon'ble NCLAT in appeal against the order dated 26.06.2020, the applicant/liquidator ought to have desisted from filing another application bearing IA No. 1165/KB/2020 before this Adjudicating Authority seeking clarifications. The applicant is a seasoned professional and would have been well advised not to venture into such a misadventure. Be that as it may, in these circumstances, not granting leave to withdraw will amount to holding the appeal before the Hon'ble NCLAT hostage, which we are loathe to do. The ends of justice will be met if we allow the applicant/liquidator leave to withdraw application, but at a cost of ₹ 50,000/- to be paid to the Prime Minister's Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund, within a period of two weeks from today - application disposed off.
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2021 (5) TMI 574
Liquidation of Corporate Debtor - Section 60 (5) of the Insolvency and Bankruptcy Code, 2016, as amended and Rule 11 of the National Company Law Tribunal, Rules, 2016 - HELD THAT:- Though the Resolution Plan was approved by the NCLT on 25.11. 2019, till date the Resolution Applicant has deliberately failed to implement the Resolution Plan. Aggrieved by the order of the Steering Committee, the Resolution Applicant filed an appeal before the Hon'ble NCLAT and NCLAT did not agree with the submissions of the Resolution Applicant, dismissed the appeal and confirmed the order of this bench dated 18.02.2020. The Resolution Applicant blatantly violated NCLT order dated 18.02.2000 and the Hon'ble NCLAT order dated 25.06.2020. From the records it appears that the total value of the Resolution Plan is approx. ₹ 900/- crores out of which ₹ 420 crores to be upfront payment and ₹ 480 crores by issuing NCDs and the Resolution Applicant failed to bring in even 5% of the plan amount. CoC permitted the Resolution Applicant to submit performance security of ₹ 42 crores with balance of ₹ 48 crores to be deposited within 90 days of the CoC's approval. However, till date the Resolution Applicant has failed to deposit the balance amount. As per I B code if no Resolution Plan is approved by the COC/Adjudicating Authority within the prescribed timeline, the extended timeline the natural corollary, automatic next step is only Liquidation of the Corporate Debtor therefore in the instant case the Adjudicating Authority did not satisfy to grant additional time to complete the resolution process as prayed for instead this Adjudicating Authority is completely satisfied to pass an order for Liquidation of the Corporate Debtor - The entire CIRP process has been carried out by exercising the Commercial Wisdom of the COC therefore the failure to implement the plan by the successful Resolution Applicant after carrying out the required due diligence, various approval process including valuation matrix, financial matrix etc therefore there is no need to grant additional time to start the process once again. Considering the above facts and background we are of the considered view that in the interest of all stake holders it is better to order for liquidation of the Corporate Debtor and the process may be completed at the earliest and in the liquidation the Corporate Debtor may be sold as a going concern among various other methods provided in I B code. Since time is essence, maximisation of value of assets of the Corporate Debtor is primary object of I B Code, we direct the Monitoring Agency, the Steering Committee, COC to carry out the Liquidation process in accordance with I B code as well as the Rules, Regulations prescribed there under and we hereby appoint the Applicant Mr. Abhijit Guhathakurta as Liquidator and he is directed to complete the Liquidation Process in accordance with Law - The initiation of liquidation process against the Corporate Debtor is allowed. Application allowed.
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2021 (5) TMI 573
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Bench notes that the Petitioner has supplied goods as per the purchase orders issued by the Corporate Debtor from time to time. The ledger account shows the details of invoices, monies paid by Corporate Debtor and monies outstanding to be paid by Corporate Debtor - The Bench also notes that appropriate invoices in respect of the same has been placed by the Petitioner upon the Corporate Debtor wherein the goods supplied and the amount mentioned in the invoices has been admitted in all cases by the Corporate Debtor. This bench is of the considered view that the Corporate Debtor is liable to pay the total amount of ₹ 1,01,12,793/- which includes principal of ₹ 46,27,984/- Plus ₹ 54,84,809/- as a compounded interest - the outstanding debt of more than ₹ 1,00,000/- is due and payable against the Corporate Debtor and Corporate Debtor has committed default in making the payment. Hence the petition is admitted. Petition admitted - moratorium declared.
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2021 (5) TMI 572
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Corporate Debtor is a party to the Debenture Trust Deed - accrued interest was not paid when it became due and payable - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor is a party to the Debenture Trust Deed in its capacity as a security provider/co-obligor and surety to that. Along with the Issuer Company, i.e., LDR, the Corporate Debtor is jointly and severally liable to repay all outstanding amounts under the NCDs. Under the terms of the Debenture Trust Deed, the Corporate Debtor agreed to make payments to the debenture holders by way of issue of an unconditional, irrevocable Corporate Guarantee. The Bench notes that as per Clause 2 of the Corporate Guarantee dated 06.10.2016, the Corporate Debtor is not only liable as a surety but also as a primary obligor. As per Clause 2 of the Deed of Guarantee, the obligation on part of the Corporate Debtor is unconditional and irrevocable. Further, the Corporate Debtor is liable as if it is the Principal Debtor under the Debenture Trust Deed as per Clause 16 of the Deed of Guarantee. The Bench notes that the Debenture Trustee is duly registered with the RoC and certification of charge has been annexed in the Petition. A Bank statement reflecting disbursal of monies has also been annexed in the Petition. We note that Corporate Debtor has not denied the execution of the trust deed or the deed of guarantee. It is also not disputed by the Corporate Debtor regarding the monies disbursed and the quantum of debt due and computation of interest. The default and its consequences clearly provide that nonpayment of interest towards outstanding NCDs is an 'event of default' and the Debenture Trust Deed recognizes that in case there is an 'event of default', the Petitioners/Debenture Holders are entitled to recover the money paid towards the NCDs. Therefore, the Bench notes that in this case an 'event of default' has occurred in terms of Clause 8.8 of the Debenture Trust Deed when accrued interest was not paid when it became due and payable and therefore the Corporate Debtor was entitled to redeem the NCDs. The existence of debt and default is reasonably established by the Petitioner as a major constituent for admission of a Petition under Section 7 of the Code. Therefore, the Petition under sub-section (2) of Section 7 is taken as complete - Application admitted - moratorium declared.
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2021 (5) TMI 571
CIRP process - discontinuation of Interim Resolution Professional in the Corporate Insolvency Resolution Process of Shree Sai Rolling Mills (India) Pvt. Ltd. - amicable settlement between the IRP and the FC - HELD THAT:- The Corporate Resolution Process (CIRP) of Shree Sai Rolling Mills (India) Pvt. Ltd. has been set aside with effect from 20.06.2020, but it is made clear that though the CIRP is set aside, but the Application filed by the FC under Section 7 of the IBC is not dismissed/is alive. It is further made it clear that both the FC and the CD are at liberty to come before this Bench with regard to the petition filed by the FC under Section 7 of IBC after the outcome of the appeal preferred by the FC before the Hon ble Supreme Court against the impugned order of the Hon ble NCLAT dated 18.06.2020. The IRP, Mr. Anil Agarwal is hereby relieved, as prayed for, from his assignment with effect from 20.06.2020 the day on his receipt of the Order of the Hon ble NCLAT and also at the request made by the CD after presenting the order dated 18/06/2020 of Hon ble NCLAT on 20/06/2020 - It is also taken on record that the matter relating to the payment of fees and other CIRP cost have been settled amicably between the IRP and the FC. However, we do not appreciate the issue relating to the IRP fees / CIRP cost is brought before this Bench for adjudication, when the Application is filed under Section 7 of IBC and IRP is appointed only at the request of the FC and with the consent letter of the IRP. Application disposed off
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Central Excise
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2021 (5) TMI 605
Abatement of duty - closure of the production activity at the unit was not for a continuous period exceeding 15 days - officer of the department has failed to mention about the machine which was made un-operational why could not be removed for certain reasons - due to heaviness of machine, it cannot be removed when it become unoperational - HELD THAT:- In terms of sub-rule (5) of Rule 6 of the said Rules, the machines which the manufacturer does not intend to operate would be uninstalled and sealed by the Superintendent of Central Excise and removed from the factory premises under his physical supervision. For the period during which the machine is thus rendered incapacitated, the concerned manufacturer would be spared the burden of excise duty since the entire levy is based on installed production capacity and not on actual manufacture or clearance of goods - In case of the present assessee, under an order dated 19th October 2015, the Inspector of Central Excise recorded that the machine was uninstalled and sealed on the said date under his supervision. However, since the machine was heavy and removal would require large number of skilled labourers and the tools which were not available, the machine was sealed in such a manner that it cannot be operated. As noted, this order was found sufficient by the Commissioner(Appeals) to enable the assessee to claim abatement of duty. It appears that the department has also accepted this order of the Commissioner(Appeals). However, for the remaining period, the claim of the assessee is rejected on the ground that the sealing order did not specify that it was sealed in such a manner that the machinery cannot be operated - the proviso to sub-rule (5) envisages that in case it is not feasible to remove such machine out of the factory premises, it shall be uninstalled and sealed by the Superintendent of Central Excise in such a manner that it cannot be operated. The fact that the machine is too heavy to be removed was recorded by the Superintendent of Central Excise in his order dated 19th October, 2015. Being the same machine, the situation for a different period, would not change. In absence of any allegations by the department and any material on record suggesting that despite sealing the assessee operated the machine, it would not be permissible to withhold the abatement of duty only on the ground that the Superintendent of Central Excise did not draw proper proceedings and did not elaborately record that the sealing was done in such a manner that the machine could not be operated. The question of law is answered in favour of the assessee.
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2021 (5) TMI 597
Maintainability of petition - Compliance with the requirement of pre-deposit - Section 35F of the Central Excise Act, 1944 - To Consider the amount deposited during investigation as pre-deposit - HELD THAT:- Irrespective of the fact whether the issues is covered on merits or not and covered by an order of the Tribunal for the previous period, the petitioner is required to pre-deposit 7.5% of the disputed tax and/or penalty or both together at the stage of the first appeal before the second respondent Commissioner of Central Excise (Appeals) and another sum of 2.5% totalling to 10% at the stage of Appeal before the first respondent Tribunal. This statutory minimum cannot be waived. The idea of rationalizing this amount to a statutory minimum is to spur final hearing of the appeal by the Tribunals and Commissioner (Appeals). Further, the Registry of the first respondent is really not concerned with the merits of the case and therefore, cannot waive the amount - it is not possible under the scheme of the amendment to the Act for the petitioner to expect the Registry of the first respondent Tribunal to adjudicate the same. Therefore, the challenge to the impugned communication on the score has to fail. Therefore, petitioner may obtain a certificate from the jurisdictional officer or Supt of Central Excise to the effect that the amount of ₹ 2.32 Crores paid by the petitioner has not been adjusted against any of the duty liability or refunded back to the petitioner - If such certificate is obtained, such certificate shall be produced before the Registry of the first respondent Tribunal - Petition disposed off.
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CST, VAT & Sales Tax
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2021 (5) TMI 600
Maintainability of petition - availability of alternative remedy of appeal - Validity of assessment order - Section 31 of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT:- In the instant case, the Assessing Authority passed the order on 31.03.2020. The Hon ble Apex Court, having regard to the situation which arose due to Covid-19 pandemic, took up the issue suo motu vide Suo Motu Writ Petition (Civil) No.3 of 2020 and initially, in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] , the Hon ble Apex Court extended the period of limitation prescribed under the general law or special laws compoundable or not with effect from 15.03.2020 till further orders and the same came to be extended from time to time - It is very much evident from a reading of the above order of the Hon ble Apex Court that the period from 15.03.2020 to 14.03.2021 is liable to be excluded from the period of limitation. Having regard to the provisions of Section 31 of the AP VAT Act, 2005 and in view of the order of the Hon ble Apex Court, this Court deems it appropriate to relegate the petitioner herein to the alternative remedy of appeal to the Appellate Deputy Commissioner - the Writ Petition is disposed of, leaving it open for the petitioner herein to avail the alternative remedy under Section 31 of the AP VAT Act, 2005, within a period of two weeks from the date of receipt of this order.
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2021 (5) TMI 592
Violation of principles of natural justice - without serving the Inspection Report, the respondent passed the impugned order - HELD THAT:- A perusal of the impugned order does not whisper about the request of the petitioner for furnishing of Inspection Report conducted by the Enforcement officials. Therefore, it can be really inferred that assessment order, dated 28.03.2018 came to be passed without furnishing the documents sought for by the petitioner, particularly, the Inspection Report of the Enforcement Wing Officials. The petitioner has also filed bank statements with his objections in respect of the assessment year 2015-2016. However, the Assessing Authority has not considered the bank statements also. Therefore, it amounts to violation of principles of natural justice. The matter is remitted back to the Assessing Authority concerned for consideration afresh - Petition allowed by way of remand.
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Indian Laws
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2021 (5) TMI 602
Principles of natural justice - time to file objections was given but notice was served early and assessment order was passed - HELD THAT:- Ext.P6 provided for a period of 15 days time to the assessee to file an objection. Perusal of Ext.P7 shows that Ext.P6 was served on the petitioner on 24.03.2021. Necessarily the period stipulated in Ext.P6 ought to have been provided to him, even if petitioner had evaded the notice till then. Since it has come on record through Ext.P7 itself that the petitioner was served with Ext.P6 notice, only on 24.03.2021, which contained the stipulation that he is given 15 days time, it was necessary to grant such period of time to file objections. Passing an order without complying with the period of time stipulated in Ext.P6 notice amounts to violation of natural justice. No prejudice would be caused to the revenue also, if Ext.P7 is set aside on the ground of natural justice, since an order of assessment can be passed afresh, after granting sufficient opportunity of hearing - Petition allowed by way of remand.
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