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TMI Tax Updates - e-Newsletter
May 21, 2021
Case Laws in this Newsletter:
GST
Income Tax
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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Recovery of GST while the appeal is pending - this Court is of the view that on account of pre-deposit which has been made by the petitioner at appellate stage read with the mandate of section 107 (7) of JGST Act, the petitioner deserves an interim protection. - execution of the impugned garnishee notice stayed - HC
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Carry forward of ITC - ITC, as per tran-1, was not reflected in the Electronic Credit Ledger - Since the petitioners have clearly made out a case for grant of relief, the jurisdictional officer/6th respondent is directed to verify the correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth respondent herein who will coordinate with the first respondent so that the petition mentioned credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic Credit Ledger pertaining to the respective writ petitioners - HC
Income Tax
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LTCG - Exemption u/s 54F - As seen that both the plots, namely, 28 and 29 were simultaneously purchased and are adjacent to each other. The assessee has claimed that both the plots were used for construction of new residential house. Simply because the application for construction was given only with reference to Plot No.28, the claim for actual investment in Plot No.29, qualifying for exemption u/s.54F, cannot be denied. Be that as it may, even if we proceed with the presumption that the assessee constructed new residential house only on Plot No.28, still Plot No.29 adjacent to new residential house will form part of new residential house thus entitling the assessee to exemption pro tanto. - AT
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Assessment u/s 144C - Reply submitted by the assessee is not considered while passing the assessment order at Ext.P7 rather it is noted therein that petitioner did not respond to the show cause notice at Ext.P4. - At this stage, it is not possible to accept the contention of the learned Standing Counsel appearing for the respondent (Revenue) that there was no need of issuance of show cause notice at Ext.P4, particularly, when the respondent had chosen to issue the said show cause notice at Ext.P4 to the petitioner. The impugned order therefore prima facie suffers from the perversity as well as non-compliance with the principles of natural justice. - HC
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Addition on account of notional rent u/s.23 - whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22? - the A.O was in error in assessing the notional lettable value of the flats held by the assessee as stock-in-trade of its business as that of a real estate developer. - AT
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Income accrued in India -Treating subscription fee received from the clients in India as Royalty/FTS within the meaning of section 9(1)(vi) and 9(1)(vii) r.w. Article -12 of India Germany Tax Treaty - Subscription fee received by the assessee is not in the nature of Royalty/FTS, the same is not taxable in India - AT
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Income from other sources - difference in the value of the property purchased by the assessee - The provisions of section 56 of the Act are for the purpose of the assessment of capital gains. Such deeming provisions do not suggest that the assessee had actually paid the consideration more than that was mentioned in the agreement or sale deed. The impugned addition made by the Ld. AO on the basis of deeming provisions and taking the difference as unaccounted income of the assessee is not sustainable in the eyes of law. - AT
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Disallowance of depreciation on motor car and disallowance on motor car maintenance - even though the personal use of Chevrolet Beat car by the assessee cannot be ruled out, the claim of the assessee for depreciation on the said car cannot be entirely disallowed and it will be fair and reasonable to restrict the same to one-third for such personal use as the claim of the assessee of having used the said car for business purpose also cannot be outrightly rejected. - AT
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Disallowance of Capital Expenditure written off - CIT-A had given a categorical finding that Capital expenditure incurred by the assessee was not doubted by the ld AO, said expenditure was incurred for the purpose of extension of project was not doubted by the ld AO and said extension project has been given up by the assessee and hence the asset generated thereon is not in use. These factual observations were not controverted by the revenue before us. - Order of CIT(A) confirmed - AT
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Deduction on account of prior period expenditure - the said expenditures are mainly in the nature of incentives payable to staff, payment of fees to contractors, payment of arrears to suppliers of power etc. - As CIT-A had deleted the said disallowance by stating that this is a recurring issue from earlier years - Order of CIT(A) confirmed - AT
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Depreciation on mobile phones - @15% OR 60% - There are smart phones which do function equivalent to the computers or much more than a computer, if the functionality of a mobile phone are shown to be more than a communication equipment, perhaps, it may qualify as a computer. However, as no such information is available in the present case, we dismiss the appeal of the assessee - AT
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Disallowance of interest paid on unsecured loans - Non-deduction of TDS - Once Form No. 15G & 15H are duly submitted by the assessee before the department, then assessee cannot be fastened with the disallowance u/s.40(a)(ia) of the Act for non-deduction of tax at source. However, these forms i.e. Form 15G & 15H have not been subjected to verification by the ld. AO. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this issue to the file of the ld. AO for examining the Form 15G & 15H submitted by the assessee - AT
Indian Laws
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Seeking to review holding of examinations and declaring results by the ICAI - Allegation of Oppressive action of a professional body-ICAI - if it treats any suggestion for improvement as a challenge to its authority or supremacy is a State, that disregards rather violates fundamental rights of a citizens guaranteed by Article 19(1)(a) of our Constitution - this Court has no hesitation in holding that the action of the Examination Committee was without jurisdiction; proceedings conducted by it were arbitrary and against the principles of natural justice and their culmination in the form of decision dated 9/10.3.2021 has been contrary to law. - HC
Central Excise
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CENVAT Credit - capital goods - lead and articles thereof, viz, lead ingot, lead dross and lead sheet classifiable under chapter 78 - The process helps restore coating inside the steel channels forming part of the machines to keep the machine in running condition. In essence, the goods on which credit has been denied have been used in the factory for repair and maintenance purpose which facts are not in dispute. - Credit allowed- AT
Case Laws:
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GST
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2021 (5) TMI 621
Service of summons - respondent submits that the summons are like spent bullets, and therefore, have become inefficacious - HELD THAT:- Mr. Bansal, on instructions, says, no steps for criminal prosecution qua the petitioner have been triggered based on the impugned summons. The writ petition is closed.
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2021 (5) TMI 618
Recovery of GST while the appeal is pending - requirement with the pre-deposit - section 107 (7) of JGST Act - HELD THAT:- In view of the specific provision of sub-Sections 6 7 of Section 107 of the JGST Act and in view of the admitted position that the subsequent garnishee notices dated 15.01.2021 covers both the appeals filed by the petitioner, this Court is of the view that on account of pre-deposit which has been made by the petitioner at appellate stage read with the mandate of section 107 (7) of JGST Act, the petitioner deserves an interim protection. The counsel for the State may seek instructions and file response to the affidavit dated 24.03.2021 and also give appropriate explanation for the statement made in the counter-affidavit filed on behalf of respondent No.-2 which prima-facie appears to be incorrect, in view of the affidavit dated 24.03.2021 filed by GSTN. The operation, implementation and execution of the impugned garnishee notice dated 14.12.2020 issued in FORM GST DRC 13 to the petitioner s banker, namely, Andhra Bank, Branch-Jagatpura, Jaipur, Rajasthan as well as the impugned garnishee notice dated 15.01.2021 issued in FORM GST DRC 13 to third party, namely, M/s. Adani Power (Jharkhand) Ltd. (SEZ Unit) as contained in Annexure-15 of the interlocutory application being I.A. 601/2021 are stayed till the next date. The matter is adjourned and is directed to be posted on 19.04.2021.
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2021 (5) TMI 617
Carry forward of ITC - ITC, as per tran-1, was not reflected in the Electronic Credit Ledger - only grievance is that in the Electronic Credit Ledger, ITC has not been carried forward - HELD THAT:- Reliance placed in the case of Hon'ble Division Bench of the Delhi High Court in M/S. BLUE BIRD PURE PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2019 (7) TMI 1102 - DELHI HIGH COURT] . In the said case also, the dealer had committed an inadvertent error in showing the available stock of goods in column 7(d) of the Form insetad of 7(a) of the Form - It was held in the case that I n the present case, the Court is satisfied that, although the failure was on the part of the Petitioner to fill up the data concerning its stock in Column 7(d) of Form TRAN-1instead of Column 7(a), the error was inadvertent. The Respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. Since the petitioners have clearly made out a case for grant of relief, the jurisdictional officer/6th respondent is directed to verify the correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth respondent herein who will coordinate with the first respondent so that the petition mentioned credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic Credit Ledger pertaining to the respective writ petitioners - Petition allowed.
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Income Tax
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2021 (5) TMI 639
Assessment u/s 144C - need of issuance of show cause notice - HELD THAT:- The impugned order at Ext.P7 shows that notices under Section 142(1) were issued to the petitioner 04.02.2021. The first notice as contemplated by Section 144C of the Income tax Act came to be issued to the petitioner on 18.03.2021 and it was accompanied with draft assessment order. Only four days time was granted by this notice at Ext.P4 to show cause. The petitioner immediately responded by the communication at Ext.P5 and sought time only upto 27.03.2021 to file reply to the show cause notice and he did reply to the show cause notice by his reply (Ext.P6) dated 23.03.2021. Reply is not considered while passing the assessment order at Ext.P7 rather it is noted therein that petitioner did not respond to the show cause notice at Ext.P4. At this stage, it is not possible to accept the contention of the learned Standing Counsel appearing for the respondent that there was no need of issuance of show cause notice at Ext.P4, particularly, when the respondent had chosen to issue the said show cause notice at Ext.P4 to the petitioner. The impugned order therefore prima facie suffers from the perversity as well as non-compliance with the principles of natural justice.
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2021 (5) TMI 638
Revision u/s 263 - LTCG - Exemption u/s 54F - Investment on construction of a new residential house on one plot and second plot was adjacent - HELD THAT:- If the amount required for exemption u/s.54F has been properly invested in the new house, the claim cannot be denied simply because the construction was not completed within the period of three years. As and when the target of investment of the eligible amount is achieved within a period of three years, the assessee earns exemption u/s.54F notwithstanding that he may continue to invest more on such new house beyond the given period. Since the law simply provides for investing the net consideration of the earlier transferred property as a sine qua non for claiming the exemption and not the completion of construction of the new residential house, such a condition cannot be read in the provision, as has been canvassed by the ld. PCIT. Other objection taken by the ld. PCIT is that the assessee claimed to have invested a sum of ₹ 1.42 crore which was not reflected either in the balance sheet or in the capital account of the assessee. On the contrary, we find from the Departmental paper book itself that the assessee did furnish Fine Living Residential House A/c. as on 30-09-2014 with investment of ₹ 1.42 crore as on 30-09-2014. Thus, this view point of the ld. PCIT also does not stand. Another objection taken by the ld. PCIT is that the assessee claimed purchase cost of Plot Nos.28 and 29 in the sum total for the purposes of exemption u/s.54F, whereas the permission for construction was taken only in respect of Plot No.28. As seen that both the plots, namely, 28 and 29 were simultaneously purchased and are adjacent to each other. The assessee has claimed that both the plots were used for construction of new residential house. Simply because the application for construction was given only with reference to Plot No.28, the claim for actual investment in Plot No.29, qualifying for exemption u/s.54F, cannot be denied. Be that as it may, even if we proceed with the presumption that the assessee constructed new residential house only on Plot No.28, still Plot No.29 adjacent to new residential house will form part of new residential house thus entitling the assessee to exemption pro tanto . The next objection taken by the ld. PCIT is that the AO failed to enquire and verify the issue of cost of construction which should have been done. Here again, the ld. PCIT is not correct. Not only this issue was verified by the AO but the necessary evidence to corroborate the assessee s claim was also placed before him, which is evident from the Fine Living Residential House deciphering investment of ₹ 1.42 crore in the new house. DR submitted that the commencement of construction certificate was issued on 20-08-2014 whereas the assessee claimed to have invested a sum of ₹ 1.42 crore as on 30-09-2014. We find from the details of Fine Living residential house that a sum of ₹ 55.04 lakh was invested in purchase of two plot Nos. 28 and 29. This leaves with a sum of ₹ 87.00 lakh which has been invested by the assessee towards purchase of cement, steel, sand, bricks, murum and soiling, labour payment and other construction expenses. Except for casting a doubt, the ld. DR could not point out as to how the spending of ₹ 87.00 lakh within a period of 1 month and 10 days was not possible. Mere doubt cannot lead to the revision of an order unless it is shown that either the AO failed to apply his mind on the issue or he applied his mind but his view was wrong in facts or in law. None of the conditions is satisfied in the instant case. In view of the foregoing discussion, we are satisfied that the ld. PCIT failed to make out a proper case for revision of the assessment order passed u/s.143(3) of the Act. Ergo, the impugned order is overturned. Appeal is allowed.
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2021 (5) TMI 637
Addition of amount as on-money on sale of land - HELD THAT:- From the very beginning, the stand of the assessee is that he was a power of attorney holder of the land-owners. Whatever act has been done, they were done in the capacity as representative of the original owner. If cheque amount is being taken by the owner, then it is to be assumed that on-money is also to be taken by the owners, unless there is evidence to prove otherwise. Faced with this situation, in the first round, the Tribunal has specifically directed the AO to examine understanding between the land-owners and the assessee; whether it has been agreed upon that land-owners would only receive the amount mentioned in the sale deed. The AO has not recorded statement of any of the land owners. He was given all the details. He has recorded the statement of one of the purchasers in the first round; but that is not a relevant evidence; that evidence can be taken for the determination of quantum, but who has received that quantum, that evidence cannot be used. A perusal of the assessment order would indicate that the ld.AO behaved in a very illogical manner by observing that if the land owners are not paid the capital gain on-money, then the assessee should pay. The law contemplates that the AO has to first determine in whose hand income has to be assessed; who are the rightful owner. The assessee being a power of attorney holder, cannot be treated as rightful owner of the income, which has arisen on sale of a particular property. His action was only in the representative capacity. We could appreciate the stand of the AO if he was able to bring on record the terms of agreement between the assessee as well as land owners specifying the distribution of amount between the assessee in the capacity as power attorney holder vis- -vis the actual owner. No such steps were taken by the AO; more so when specifically directed by the Tribunal in the first round of litigation. Taking into consideration all these aspects, we are of the view that there is no justification for sustaining addition - Decided in favour of assessee.
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2021 (5) TMI 636
Addition on account of notional rent u/s.23 - whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22? - HELD THAT:- As decided in own case [ 2021 (4) TMI 849 - ITAT MUMBAI] property in question was held by the assessee as stock-in-trade of its business of construction and development of real estate properties. As observed the solitary issue involved in the present appeal is as to whether or not the ALV of the properties held by the assessee as stock-in-trade of its business as that a real estate developer is liable to be brought to tax in its hands under Sec.22. As stated by the ld. A.R, and rightly so, the issue herein involved is squarely covered by the order of the ITAT C bench, Mumbai, in the case of M/s Osho Developers Vs. ACIT-32, Mumbai, [ 2020 (11) TMI 218 - ITAT MUMBAI] wherein direct the A.O to delete the addition made by him towards the ALV of the flats held by the assessee as stock-in-trade of its business as that of a builder and developer As such, we herein concur with him that the A.O was in error in assessing the notional lettable value of the flats held by the assessee as stock-in-trade of its business as that of a real estate developer. Appeal filed by the revenue is dismissed.
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2021 (5) TMI 635
Disallowance u/s 80P(2)(d) - claim of interest income from the deposits in Co operative bank - AO disallowed the claim for both the years under consideration holding that the deduction is available for investment in other co operative societies and not other co operative banks as he was of the view that Co-operative Society and Co operative Banks have been given different treatment even under section 194A of the Act which relates to TDS - HELD THAT:- We find that the issue in respect of deduction claimed in respect of interest income earned from Co operative Banks under section 80P(2)(d) of the Act is squarely covered by the decisions relied upon by the learned Counsel for the assessee as aforesaid wherein identical issue, except variation in figures, has been decided by the Tribunal in (i) Amit Tata Employees Co operative Housing Society Ltd. v/s ACIT, [ 2019 (7) TMI 1811 - ITAT MUMBAI] (ii) Poonam Chambers Premises Co Op. Society Ltd. v/s ACIT. [ 2018 (8) TMI 2033 - ITAT MUMBAI] (iii) Merwanjee Cama Park Co operative Housing Society Ltd. v/s ITO [ 2017 (10) TMI 58 - ITAT MUMBAI] (iv) ITO v/s Eternity Co operative Housing Society Ltd. [ 2018 (5) TMI 2029 - ITAT MUMBAI] Consistent with the view taken in the aforesaid Co ordinate Bench decisions in which the decision of the Hon ble Karnataka High Court in Totagars Co operative Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] was distinguished by the Co ordinate Bench. We hold that the assessee is a Co operative Society is entitled for claiming deduction under section 80P(2)(d) of the Act in respect of the interest income earned from either from Co operative Bank or from Co operative Society whatsoever that may be. Consequently, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.
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2021 (5) TMI 634
Addition as bills recoverable during the year - HELD THAT:- As the assessee has failed to prove that the amount is bills receivable during the year under consideration, therefore, the authorities below treated the same undisclosed bills receipts and added the same to the income of the assessee. Now, it is the contention of the assessee that the amount as already formed part of gross receipts disclosed as the same amount was received in subsequent year. Even otherwise, the contention of the assessee is that a profit percentage may be determined for the undisclosed receipts - we find force in the submission of ld. A.R. of the assessee that the profit percentage embedded the undisclosed receipts is to be taxed. To meet the ends of justice, if the profit percentage @ 5% on the undisclosed receipts is taxed in the hands of the assessee.. Therefore, direct the AO to determine the net profit @ 5% of the undisclosed receipts. Accordingly, this ground is partly allowed. Disallowance of 3.5% of the expenses - HELD THAT:- On perusal of the orders of lower authorities, find that since the assessee failed to submit the ledger accounts for expenses supported with bills vouchers to the extent of ₹ 84,60,600/-, and considering the fact that the assessee has shown net profit @ 1.6% of the expenses, the AO disallowed the same on estimate basis @ 3.5% of ₹ 84,60,600/-, which comes to ₹ 2,96,121/-. The contention of assessee is that the percentage of profit determined by the AO is on higher side and requested to reduce the profit percentage. Ld. A.R could not explain as to why the assessee failed to furnish supporting bills and vouchers before the lower authorities and before the Tribunal. Therefore, CIT(A) has considered the issue correctly, which do not require any interference. Hence, this ground is rejected. Addition regarding deduction of TDS - HELD THAT:- CIT(A) has directed the AO to verify the claim of TDS and allow the credit as per law, as per the submission of the assessee. It was the submission of ld. D.R. that no credit can be allowed on the basis of TDS certificate without being demonstrated in the TDS portal. Hence, direct the AO to verify from the TDS portal and if the contention of the assessee is correct that TDS has been deducted, then same should be allowed.
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2021 (5) TMI 633
Income accrued in India -Treating subscription fee received from the clients in India as Royalty/FTS within the meaning of section 9(1)(vi) and 9(1)(vii) r.w. Article -12 of India Germany Tax Treaty - HELD THAT:- The Tribunal following its own order in [ 2019 (5) TMI 405 - ITAT MUMBAI] held that the subscription fee is neither Royalty nor FTS, hence, the provisions of section 9(1)(vi) or 9(1)(vii) are not attracted. The transaction is not even covered by Article- 12 of India Germany DTAA. The facts and nature of transactions in impugned assessment year are pari materia, hence, respectfully following the decision of Coordinate Bench, we allow ground of the appeal for parity of reasons. Taxability in India - Subscription fee received by the assessee is not in the nature of Royalty/FTS, the same is not taxable in India
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2021 (5) TMI 632
Addition of interest expense - Allowability of interest paid on borrowed capital where interest bearing funds have been advanced interest free to the sister concern - transactions of taking money on loan and giving them as advance or loan for interest is being carried out regularly round the year - HELD THAT:- It is a well known fact that in banking industries also per annum rates of interest on Fixed Deposit normally range between 5% to 7% whereas for the cash credit loans and other business loans the banks are charging much higher interest. There cannot be a straight jacket formula that if unsecured loan is taken @12% per annum one will have to charge interest more than 12% on loan given. The same may or may not happen. It is up to the businessmen to take a wise decision at the given point of time and the risk involved in giving loan on interest. In finance business, one is concerned to earn profits but major concern is of receiving the principle amount back as and when due to be received. In the instant case the transactions of taking money on loan and giving them as advance or loan for interest is being carried out regularly round the year. It shows that interest paid on secured and unsecured loan is wholly and exclusively for the business purpose of earning income from loans and advances. The allowability of interest paid on borrowed capital where interest bearing funds have been advanced interest free to the sister concern was deliberated upon by the Hon ble Supreme Court in S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] In the instant case firstly there is a clear nexus of interest paid against the income received during the year, the transactions carried out by the assessee are for the commercial expediency and for this purpose the rate of interest paid and received by the assessee are varying from case to case which is duly evident from the records placed before us and the audited financial statements. The action of Ld. A.O was not justified in taking up few out of many advances given by the assessee to arbitrarily levy interest rate on loan given at an agreed rate of interest which may be lower than the interest rate charged from other persons or no interest is charged for commercial expediency purposes. We thus set aside the finding of Ld. CIT(A) and delete the disallowance of interest - Decided in favour of the assessee.
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2021 (5) TMI 631
Income from other sources - value adopted by the AO of the property purchased by the assessee will be stamp duty - HELD THAT:- Since, at the time of execution of agreement to purchase, there was no provision in the Act for taking stamp duty as the value of the property for determination of capital gains, in case the consideration is paid less than the stamp duty value, therefore, the assessee did not apprehend any such action by the assessing officer. The assessee made part payment through cheque as per the terms of the agreement. In my view, mere mentioning of the date of the very next day on the cheque did not make any difference. A provision was made to take the value of consideration as stamp duty value if the consideration paid is less than the stamp duty value. However, saving clause by second proviso has been made applicable stating that, if the consideration has been paid as per value mentioned in the agreement to purchase, then the amount mentioned in the agreement can be taken the amount of consideration if the consideration referred to in the agreement or a part thereof, is paid on or before the date of agreement. This provision did not exist at the time of entering into the agreement to purchase in question. The case of the assessee is self-explanatory. The registry was done on 28-05-2013. However, the part payment was made by cheque on the next day of execution of agreement i.e. 20.07.2012, which in our view, was towards the fulfillment of the terms of the contract. Therefore, the Ld. AO is not justified in taking a hyper technical view, whereas, the facts of the case show that there is no malafide or false claim on the part of the assessee. The provisions of section 56 of the Act are for the purpose of the assessment of capital gains. Such deeming provisions do not suggest that the assessee had actually paid the consideration more than that was mentioned in the agreement or sale deed. The impugned addition made by the Ld. AO on the basis of deeming provisions and taking the difference as unaccounted income of the assessee is not sustainable in the eyes of law. Accordingly, the same is ordered to be deleted. Appeal of the assessee stands allowed.
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2021 (5) TMI 630
Deemed divident addition u/s 2(22)(e) - HELD THAT:- Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] wherein it was held that if such loan or advance is given by the Company to a shareholder as a consequence of any further consideration which is beneficial to the company received from such a shareholder, such advance or loan cannot be said to be deemed dividend within the meaning of section 2(22)(e) of the Act . Explaining further it was observed by Their Lordships that the gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of section 2(22)(e) but not the loans or advances which are given in return to an advantage conferred upon the company by such shareholder . In the present case, the amount of loan in question was given to the assessee by the concerned company on interest and since the said loan was not a gratuitous one and was given in return to an advantage conferred upon the company by the assessee in the form of interest, find merit in the contention of the ld. Counsel for the assessee that the same cannot be treated as deemed dividend within the meaning of section 2(22)(e). Income from house property - deduction on account of interest on Housing Loan - HELD THAT:- Assessee has not raised any objection for getting this matter verified by the Assessing Officer, I restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim of the assessee that deduction on account of interest on Housing Loan was claimed only to the extent of ₹ 1,50,000/- and not ₹ 5,18,115/- as wrongly taken by the ld. CIT(Appeals). If the claim of the assessee is found to be correct on verification, the Assessing Officer shall delete the disallowance as directed to be made by the ld. CIT (Appeals) on this issue. Ground No. 2 of the assessee s appeal is accordingly treated as allowed for statistical purposes. Disallowance of depreciation on motor car and disallowance on motor car maintenance - HELD THAT:- As assessee was owner of two cars, one Chevrolet Beat and the other Maruti Van. Since the Maruti Van was being used by the assessee for the purpose of business, depreciation claimed on the said car was allowed by the Assessing Officer. The claim of depreciation made by the assessee on account of Chevrolet Beat car, however, was disallowed by the Assessing Officer. In my opinion, even though the personal use of Chevrolet Beat car by the assessee cannot be ruled out, the claim of the assessee for depreciation on the said car cannot be entirely disallowed and it will be fair and reasonable to restrict the same to one-third for such personal use as the claim of the assessee of having used the said car for business purpose also cannot be outrightly rejected.Therefore, direct the Assessing Officer to restrict the disallowance made on account of depreciation of Chevrolet Beat car to the extent of 1/3rd. Similarly the disallowance made by the Assessing Officer on account of car maintenance for personal use to the extent of 50% is directed to be restricted to one-third. Ground No. 3 of the assessee s appeal is accordingly partly allowed.
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2021 (5) TMI 629
Deduction on account of prior period expenditure - CIT-A had deleted the said disallowance by stating that this is a recurring issue from earlier years and the said issue has been decided in favour of the assessee by his predecessor for the Asst Year 2001-02 - HELD THAT:- The assessee company is engaged in the business of generation and distribution of electricity. The return of income for the Asst Year 2004-05 was filed by the assessee company on 29.10.2004 declaring total loss of ₹ 415,79,84,240/-. We find that the ld AO on verification of various details filed by the assessee company in the return of income and during the course of assessment proceedings observed that assessee had debited prior period expenditure to the tune of ₹ 501,72,79,228/- and claimed the same as deduction during the year under consideration and was asked to furnish the details with evidences to prove that the said expenditure got crystallised during the Asst Year 2004-05. We find that the assessee had replied before the ld AO by drawing specific reference to the relevant annexure to the Tax Audit Report and by stating that the prior period expenditure debited in the books mainly pertain to expenditure in respect of which, a provision was made in earlier year and the exact amounts have been ascertained in the year under consideration and exact amounts have been ascertained in the year and hence the differential amount between provision and actual sum has been debited as prior period expenditure. As submitted that the said expenditures are mainly in the nature of incentives payable to staff, payment of fees to contractors, payment of arrears to suppliers of power etc. Detailed statements giving account head wise, location code wise were furnished before the ld AO. The assessee also drew the attention of the ld AO that assessee is required to maintain its books of accounts as per Rule prescribed u/s 69 of Electricity Supply Act, 1948, which mandates disclosure of prior period expenditure separately in the books. As CIT-A had deleted the said disallowance by stating that this is a recurring issue from earlier years and the said issue has been decided in favour of the assessee by his predecessor for the Asst Year 2001-02. We further find that this tribunal in Asst Year 2001-02 in assessee s own case vide its order in [ 2015 (9) TMI 1682 - ITAT MUMBAI] had upheld the action of the ld CIT-A. Disallowance of Capital Expenditure written off - HELD THAT:- We find that the write off capital expenditure on infructuous / abandoned projects has been accounted by the assessee in its books of accounts in accordance with The Electricity (Supply) (Annual Accounts) Rules, 1985 which is mandatorily to be followed by the assessee company. The said rules also mandate that the expenditure incurred on identification, survey and feasibility studies before the project is considered for sanction or rejection and later if the said project is rejected, then the full amount of expenditure shall be charged to the revenue as infructuous capital expenditure in the year in which the project is rejected. Hence it could be safely concluded that the assessee had written off the expenditure in accordance with the mandate provided by the aforesaid rules. It is not in dispute that the project got rejected during the year under consideration. As per letter addressed by assessee company to The Executive Engineer 400KV L.C.Division, Kalwa, wherein it was specifically pointd out the Chief Engineer (Tr.Plng) Mumbai had informed that the work of 400KV Tarapur-Boisar Line with extention unit 3 and 4 (2 *500MW) shall be executed by Power Grid Corporation of India Ltd i.e other than M.S.E.B (assessee herein) . Accordingly, the assessee had intimated in the said letter that the amounts incurred towards capital expenditure has been written off in the appropriate head amounting to ₹ 15.60 lakhs. CIT-A had given a categorical finding that Capital expenditure incurred by the assessee was not doubted by the ld AO, said expenditure was incurred for the purpose of extension of project was not doubted by the ld AO and said extension project has been given up by the assessee and hence the asset generated thereon is not in use. These factual observations were not controverted by the revenue before us. - Decided against revenue. Disallowance u/s 43B - deduction for payment of electricity duty made by the assessee - HELD THAT:- As decided in own case [ 2015 (9) TMI 1682 - ITAT MUMBAI] the electricity duty collected by the licensee from the consumers is so done by the licensee as an agent of the State and, hence, the same cannot be considered to a trading receipt in the hands of the licensee. It does not constitute income of the licensee and cannot be included in the licensee's income for the purpose of computation of income tax. It is not a business receipt of the licensee which the licensee collects on its own behalf in connection with its business of generating and supplying electricity. The licensee does not collect the electricity duty for its own consumption or utilization. If the licensee collects the duty but does not pay the same to the Government, the statute provides mechanism for the Government to recover the same from the licensee. Even iii a case where the licensee is unable to recover the duty but recovers the energy charges, the statutes still provides a procedure for the Government to recover the duty either from the consumer or from the licensee. This view of ours finds support from the decision of Commissioner of Income Tax-vs.-Devatha Chandraiah [ 1983 (4) TMI 6 - ANDHRA PRADESH HIGH COURT] . Though the said case deals with sales tax, the principle laid down in that case supports our view. The mischief that Section 43B of the Income Tax Act intended to present, is taken care of by the provisions of the Bengal Electricity Duty Act itself. - Decided in favour of assessee. Disallowance of loss on account of obsolescence of fixed assets, flood, cyclone, fire etc - Disallowance of Deferred Revenue Expenditure written off and Disallowance on account of write off of intangible assets - HELD THAT:- As decided in assessee's own case [ 2015 (9) TMI 1682 - ITAT MUMBAI] we direct the ld AO to grant depreciation on loss on obsolescence of fixed assets, grant deduction for loss fixed assets due to flood, cyclone, fire etc and grant deduction for intangible assets written off. Disallowance of expenses incurred towards cost of raising finance - HELD THAT:- We find that the ld CITA applied the proviso to section 36(1)(iii) of the Act which is applicable from Asst Year 2003-04 onwards by stating that all expenses on borrowed funds could be allowed to be capitalised until the asset is put to use and accordingly upheld the action of the ld AO. As relying on assessee's own case [ 2019 (8) TMI 1708 - ITAT MUMBAI] we direct the ld AO to grant deduction towards cost of raising funds for both the Asst Years in appeal before us. Disallowance of Penal Interest in respect of capital liabilities - allowability of interest on delayed payment of purchase of assets payable to Ahmedabad Cantonment Board - CIT-A deleted the addition - HELD THAT:- We find from letter dated 15.11.2006 filed before the ld AO by the assessee that this sum represent interest on balance amount (interest on delayed payment) of purchase of assets payable to Ex.Licensee viz M/s Ahmedabad Cantonment Board , Aurangabad and that the same is payable as per C.E. (Comm) letter No. CE(Com)/PG/Acctts-32/832 dated 23.3.2004 by the assessee. Hence this is a statutory payment made by the assessee which is squarely compensatory in nature and hence cannot be construed as penal in nature. Accordingly, the provisions of Explanation to Section 37(1) of the Act would not be applicable to the same. Moreover, the said interest is similar to the interest payable in the sum to REC which has been allowed by the ld CITA. We find that the nature of both the transactions are similar. Hence we find that the ld CITA is not justified in upholding the disallowance on account of ₹ 16,060/- alone.
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2021 (5) TMI 628
Depreciation on mobile phones - @15% OR 60% - assessee is a company engaged in the business of purchase and sale of air-time for mobile phones - HELD THAT:- This issue has been decided by the solitary decision in the case of Federal Bank Ltd. Vs. ACIT [ 2010 (11) TMI 115 - KERALA HIGH COURT] wherein it has been held that mobile phones are not computers and, therefore, depreciation on these mobile phones shall be allowed at the general rate of depreciation on plant and machinery @ 15%. This being the solitary decision on the issue and is binding on us, respectfully following that we uphold that depreciation on mobile phones is allowable @ 15% and not @ 60%. There are smart phones which do function equivalent to the computers or much more than a computer, if the functionality of a mobile phone are shown to be more than a communication equipment, perhaps, it may qualify as a computer. However, as no such information is available in the present case, we dismiss the appeal of the assessee.
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2021 (5) TMI 627
Disallowance of interest paid on unsecured loans - assessee pleaded that the aforesaid interest was paid to five parties without deduction of tax at source and those parties had also furnished Form Nos.15H 15G before the assessee - HELD THAT:- As submission of the assessee was rejected by the ld. CIT(A) by stating that the said second proviso to Section 40(a)(ia) was introduced only w.e.f. 01/07//2012 and cannot be made applicable for A.Y.2011-12. We find that the additional evidences filed by the assessee containing Form15G 15H ought to have been admitted by the ld. CIT(A) as assessee was genuinely prevented from filing the same before the ld. AO as no questions were received by the ld. AO regarding the same. Once Form No. 15G 15H are duly submitted by the assessee before the department, then assessee cannot be fastened with the disallowance u/s.40(a)(ia) of the Act for non-deduction of tax at source. However, these forms i.e. Form 15G 15H have not been subjected to verification by the ld. AO. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this issue to the file of the ld. AO for examining the Form 15G 15H submitted by the assessee and decide the issue of disallowance of interest on unsecured loans afresh in accordance with law. The ld. AO is also directed to give a specific finding with regard to applicability of second proviso of Section 40(a)(ia) r.w.s. 201(1) of the Act while deciding the issue. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
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2021 (5) TMI 626
Levying penalty u/s 271(1) (c) - bogus accommodation entries - HELD THAT:- Several notices were returned unserved and hence we are proceeding to dispose of the appeal by hearing learned Departmental Representative and perusing records. We note that in this case the assessee was engaging into bogus accommodation entries. The gross receipt shown income was estimated by the AO @ 0.75%. Assessee did not contest quantum. In penalty and appellate proceedings also it did not make convincing submission. It is noted that the issue in dispute was bogus expenses. CIT(A) has relied upon the decision in the case of Kalindi Rail Nirman Engineering Ltd. [ 2014 (4) TMI 679 - DELHI HIGH COURT] for sustaining levy of penalty. In our considered opinion learned CIT(A) has passed reasonable order. Appeal filed by the assessee stands dismissed.
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2021 (5) TMI 625
Estimation of income - Bogus purchases - hawala Purchases - HELD THAT:- We find on perusal of the assessment order the AO has not disputed the sales, whereas the assessee has made bogus purchases from the entities only to make savings in respect of non- payment of tax. We considering the facts and circumstances and the series of Hon ble Tribunal decisions in the similar cases and the precedence, where the income estimated @ 12.5% of the bogus purchase transaction were accepted. Accordingly, we restrict the addition to the extent of 12.5% of the bogus purchases and modify the Ld.CIT(A) order sustaining the addition to the extent of 12.5% and partly allow the grounds of appeal of the assessee. In the result assessee s appeal is partly allowed.
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2021 (5) TMI 624
Reopening of assessment - Jurisdiction of AO u/s 127 - whether ITAT possessed jurisdiction to return a finding on whether the AO‟s order was a nullity, and can give the verdict that such adjudication cannot go into the merits of such of the proceedings? High Court [ 2015 (2) TMI 410 - DELHI HIGH COURT] has decided the issue in favor Revenue. Assessee has withdrawn its appeal from Supreme Court.
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2021 (5) TMI 622
Assessment of non-existent company - Merger of the company - scope of section 292B - Revenue argued that, till the issuance of notice under Section 143(2) of the Act, the name of the assessee had not changed and the notice was issued in the correct name and the error, even if any in the name of the Respondent-Assessee in the assessment order, is an error which is within the jurisdiction of the AO and which is correctable. HELD THAT:- Difference of opinion between the two judges. Since the difference of opinion here, is on whether a substantial question of law arises, we are of the view that as per the said tradition, the question of law has to be framed and appeal admitted. Further, since the date of hearing, the roster of this Court has changed. Subject to orders of Hon ble the Chief Justice, list before the roster Bench on 27th July, 2021.
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Corporate Laws
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2021 (5) TMI 615
Validity of AGM held - fit and proper persons to occupy the office of Directors of the Company or not - validity of appointment of Respondents 5 to 9 as additional Directors of the Company - HELD THAT:- The Respondents have made available copies of various documents including relevant Minutes of the Annual General Meeting (AGM) conducted in respect of the Company. Since the Petitioners are alleging that they were not given due notices of the meetings, not furnished statements for the financial years in question etc., it is necessary to advert whether those allegations of Petitioners are borne out of record or not. The following facts establishes that the Petitioners were given adequate opportunity in participating in the affairs of Company, but they did not want to own any responsibility for the affairs of Company and thus quit from management. It is settled position of law that the affairs of a Company will be conducted through a duly constituted Board of Directors. As per law, minority shareholders have right to protect their interest from the majority shareholders. It appears from the above that all the major decisions regarding sale of equity, introduction of new directors etc. were taken in the above EGMs, following the due procedure. Also, in the present case, the Petitioners having enjoyed power of management of the Company with mere 25% shareholding of the Company, for a considerable period of time, and after voluntarily quitting from the management of the Company, have started raising frivolous issues during various AGMs and also filed the present Petition by abusing process of law. It is relevant to point out here that the Petitioners, immediately after filing the instant petition, wanted to withdraw the instant petition with a liberty to file a fresh petition due to various material defects committed, however the same was dismissed by this Tribunal as stated supra. This shows as to how the petitioners are so casual and abusing the process of law. The instant petition is filed with unclean hands with an intention to abuse and misuse the process of law and the same is contrary to the settled principle of law. The Petitioners failed to make out any case so as to interfere in the affairs of Company, as the principles of natural justice are duly followed by the Respondents in conducting AGMs in question and the Petitioners - Petition dismissed.
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2021 (5) TMI 614
Restoration of name of respondent company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore, it could not be termed as a defunct company as per Section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. The Public Notice of Registrar of Companies, striking off the name of the company, is hereby declared illegal and set aside - Appeal allowed.
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2021 (5) TMI 608
Seeking restoration of name of company in the Register of Companies, maintained by the Registrar of Companies - Section 252(3) of the Companies Act. 2013 - HELD THAT:- The materials available on record indicates that the failure of the Company to furnish the statutory returns with the RoC was not intentional. Apparently the Company has been carrying on its operations as the financial statements would indicate. Unless the Company's name is restored it will prejudicially affect its prospects and adversely influence the Directors in their future endeavours. The promoters of the Company as well as the Appellant are keen to carry on and perform the objects of the Company in right earnest. There has been substantial investments in the project. The Company is continuing its business. Unless the name of the Company is restored in the Register of Companies it would suffer financially and may go out of business. The directors of the company would also face disqualification. The name of the Company should be restored in the Register of Companies - Appeal allowed.
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2021 (5) TMI 607
Oppression and mismanagement - non-service of notice for any meeting except for the meeting dated 14.10.2017 - Rights issue applied or not - HELD THAT:- The notice for the meeting is sent and he is also having knowledge of meeting, the petitioner has received the offer letters for Rights issue and he has not applied for the Rights issue. Further Rights issue was made in October 2017, and he is having the knowledge of Rights issue and its allotment, he filed this petition as an afterthought only in 30.10.2018 on non-receipt of full consideration for sale of the shares as per his version orally agreed consideration. Hence, the Rights Issue and its allotment by the company is in order. Service of notice - HELD THAT:- The Respondent Company has not filed any proof for serving the notice or attendance of the Petitioner in the meeting and Respondent no 3 contended that notice was served and postal receipt is attached in page 317 of the petition. But there are no postal receipt, further the DIN no of R4 and R5 is allotted on 03.01.2018 where as they were appointed as Directors on 26.12.2017. As per Section 152(3) of the Companies Act, No person shall be appointed as Director of a company unless he has been allotted the Director Identification Number under Section 154 or any other number under as may be prescribed under Section 153 Hence, the appointment of R4 and R5 as director in the EOGM dated 26.12.2017 is not valid. It is admitted by the petitioner that he has received ₹ 25 lakhs from R4 and ₹ 25 lakhs from R5 as consideration for sale of shares. The Respondents have agreed to transfer the shares to petitioner if ₹ 50 lakhs is repaid. The petitioner is also willing to repay ₹ 50 lakhs. The Petitioner has liberty to repay ₹ 50 lakhs and get back his share certificate. Any transfer shares without Share Transfer Form, is not valid - The Respondent agreed not to Effect the sale of the assets to purchaser (Respondent no 6) and stated that the purchaser is not interested in purchase. It is admitted by the Respondent that the Bank Loan is repaid. In that event the Respondent 1 Company to co-operate and furnish/execute necessary papers/documents for release of the personal property of the petitioner mortgaged with the Bank - Petition partly allowed.
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Insolvency & Bankruptcy
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2021 (5) TMI 616
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:- It is not in dispute that the Respondent paid principal amount and only payment of interest is stated to be delayed in accordance with the Terms and Conditions of Sale. It is not known whether any prior purchase agreement was executed between the parties, prior to supply of goods in question. The Respondent has also denied receipt of any statutory demand notice as required under the provisions of Code. Moreover, the instant Petition is alleged to have filed to recover interest part, that too against solvent Company. And mere agreeing to pay outstanding cannot automatically entitled a party to invoke provisions of Code. It is also to be noted that provisions of Code are being suspended periodically by the Govt. of India to give relief to affected industry. Therefore, invocation of provisions code in the present circumstances is too premature and not justified basing on facts and circumstances. Petition is hereby disposed of by directing the Parties to explore the possibility of settling the issue in question as expeditious as possible, failing which, the Petitioner is entitled to approach this Adjudicating Authority by filing appropriate Petition in accordance with law.
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2021 (5) TMI 613
Revaluation of Corporate Debtor - Revaluation sought so that resolution plan can be revised - HELD THAT:- It appears from the record that the resolution of the present Corporate Debtor has been in lurch since the beginning. It appears from the record that the 180 days' CIRP period had expired on 02.09.2019, upon application, this Adjudicating Authority vide its order dated 30.08.2019 approved the extension of the CIRP period for further ninety days which expired on 01.12.2019. This Adjudicating Authority extended the said period further by forty five days upon submission on behalf of the RA that they were desirous of substantially increasing their financial offer. It is seen that the CoC had been repeatedly requesting the RA to increase the amount proposed and the RA had increased the said amount by a sum that was not acceptable to the CoC. The CoC had therefore decided to send the CoC in liquidation and an application was filed before this Adjudicating Authority. Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor. In the present case, the CoC has, by 97.21% votes, resolved to liquidate the Corporate Debtor - we are not inclined towards granting the prayer for revaluation of the Corporate Debtor. Application dismissed.
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2021 (5) TMI 612
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- From the Application it is noted that the outstanding debt amount is approximately ₹ 84.87 Crores and the account was classified as NPA/default on 10.04.2019. The Application was filed in the month of January 2019 and in spite of lapse of more than one and half years the Respondent did not pay even a single rupee to the Petitioner despite various assurances/submissions made during the course of the submissions - the debt and default under Section 7 of the IBC, 2016 is established. The Petition is complete in all respect and there is no reason to deny admission of this Petition held under Section 7 of IBC and to initiate CIRP proceedings against the Respondent. The outstanding debt amount is approximately ₹ 84.87 Crores and the account was classified as NPA/default on 10.04.2019. The Application was filed in the month of January 2019 and in spite of lapse of more than one and half years the Respondent did not pay even a single rupee to the Petitioner despite various assurances/submissions made during the course of the submissions. Finally, during the hearing held on 14.12.2020, Ld. Counsel for the Respondent submitted that settlement had failed. In view of the same, the debt and default under Section 7 of the IBC, 2016 is established. The Petition is complete in all respect and there is no reason to deny admission of this Petition held under Section 7 of IBC and to initiate CIRP proceedings against the Respondent. Under section 7(5) of IBC where the Adjudicating Authority is satisfied that a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed RP, it may, by order, admit such application; It clearly shows that the Respondent is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. In the facts and material made available on record, it is satisfying that debt and the default stands established and no disciplinary proceedings pending against the proposed IRP therefore the petition deserves to be admitted and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.
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2021 (5) TMI 611
Seeking extension of time allowed to him to liquidate the Corporate Debtor due to time lost on account of Covid pandemic - section 60(5)(c) read with Regulation 47A of the Insolvency and Bankruptcy Board of India (Liquidation Process) regulations, 2016 - HELD THAT:- The relevant provisions of Section 60(5)(c) of the I.B. Code, 2016 read with Regulation 47A of the of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 are examined and exclusion of time for the period 25.03.2020 to 31.13.2020 from the time allowed to complete the liquidation process is allowed as prayed for. Application disposed off.
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2021 (5) TMI 610
Dissolution of the Corporate Debtor - Section 54(1) of the Insolvency Bankruptcy Code, 2016 read with Regulation 45(3) of the Insolvency and Bankruptcy Board of India (Liquidation Process Regulations), 2016 - HELD THAT:- From perusal of the final report and the Compliance Certificate filed in Form-H by the Applicant, it is seen that the Corporate Debtor has been completely liquidated and in the circumstances as averred and as prayed for by the Applicant that an order for dissolution is required to be passed by this Tribunal under Section 54 of the IBC, 2016. The dissolution of the Corporate Debtor viz., M/s. Business Jets (India) Private Limited is ordered - application allowed.
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2021 (5) TMI 609
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Creditors or not - existence of debt and dispute or not - contention of the Petitioner's counsel is that since no dispute has been raised within 10 days from the receipt of the demand notice, therefore, it is no dispute - HELD THAT:- Earlier when the first demand notice was served upon the Corporate Debtor, he sent the reply within the prescribed period and raised the dispute. However, that company petition was dismissed as withdrawn at the request of the petitioner on technical ground - The contention of petitioner's counsel is that since in that matter, the demand notice was delivered through the counsel, the petitioner during the course of hearing had made a prayer to withdraw the petitioner with a liberty to file a fresh application and accordingly, that Application was dismissed as withdrawn. Again, the second demand notice was served upon the Corporate Debtor. Of course, the Corporate Debtor had not given reply to that demand notice but after appearance, the Corporate Debtor has filed the reply and annexed the emails exchanged between the parties. There are several emails exchanged between the parties regarding the termination of contract letter dated 20.11.2014 and dispute being raised regarding the quality of the work and the violation of the terms and conditions of the contract by the Corporate Debtor, which compelled the Corporate Debtor to cancel the contract - petitioner has failed to produce any document to show that in the light of the email exchanged between the parties, the termination of contract was recalled. The documents placed by the Corporate Debtor on record have established that there was a pre-existing dispute between the parties regarding the quality of the goods as well as the amount of debt and the matter had already been referred as per Clause 39.00 of the agreement for Arbitration - even no reply to the demand notice was sent in terms of Section 8(2) of the IBC, 2016, the Corporate Debtor can raise a dispute by filing the reply and that has been done by the Corporate Debtor - Also, the deduction of TDS amounts to acknowledgement of debt. Time Limitation - HELD THAT:- In Part-IV column-II, the applicant has mentioned several dates of default and according to that, the first date of default is 30.01.2010 and the last date of default is 27.04.2017, whereas the contention of the respondent is that the contract was terminated on 20.11.2014 and therefore, the cause of action arose on that day - Mere plain reading of the provision shows that the application must be filed within three years from the date when the right to apply accrues - The petition is also barred by limitation. Petition dismissed.
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Central Excise
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2021 (5) TMI 606
CENVAT Credit - capital goods - lead and articles thereof, viz, lead ingot, lead dross and lead sheet classifiable under chapter 78 - period April 2005 to January 2010 - HELD THAT:- The goods in question have been used in the repair and maintenance which is not in dispute and the same has been duly recorded by the Ld. Commissioner in para 5.4 of the impugned order in page no. 14. After taking note of the diagram and photographs submitted by the appellant in the course of adjudication, the Ld. Commissioner has observed that goods in question have been used to channelize sulphuric acid in the manufacturing process. The process helps restore coating inside the steel channels forming part of the machines to keep the machine in running condition. In essence, the goods on which credit has been denied have been used in the factory for repair and maintenance purpose which facts are not in dispute. The appellant is legally eligible for credit and hence, the instant demand cannot be sustained - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (5) TMI 619
Principles of natural justice - It is the specific contention of the learned counsel for the petitioner that the petitioner has gone to the office of the respondent more than one occasion with the books of accounts, but they did not verify - HELD THAT:- Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006, provides for reasonable opportunity, which includes the personal hearing. Even if the petitioner has not replied or file any objection, it is the duty of the respondent to give the petitioner personal hearing by giving a notice to the petitioner fixing the date of hearing. Though the respondent has stated that the petitioner was called to produce the books of accounts, he has not produced. But, it is the specific contention of the petitioner that the petitioner has produced the books of accounts more than once, but it was not verified by the respondent. Therefore, considering the facts and circumstances of the case, this Court is of the considered view that the impugned order is liable to be set aside and the matter needs consideration afresh. Petition allowed by way of remand.
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Indian Laws
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2021 (5) TMI 623
Refund of the rebate agreed upon by the parties - grant of escalation of charges for work done beyond the scheduled period - costs imposed on the appellant by all three forums - HELD THAT:- It is an admitted fact that there was substantial delay attributable to the appellant in handing over the sites for the 68 B, C and D quarters to the respondent. The appellant has not contested this finding before us. 16. With respect to the first issue, viz., on the issue of refund of rebate, the Arbitrator held that the rebate of 16% on the price of construction of 100 units of A and B quarters was given by the respondent on the condition that he would be able to execute both the works simultaneously. The Arbitrator interpreted the rebate as a conditional one on analysis of the documents on record, particularly the letter dated 14.06.1988 sent by the respondent to the appellant subsequent to the negotiations held between them, the award of both contracts to the respondent on the same date and the works programme (L2) for both the works. Grant of escalation charges for work done by the respondent beyond the scheduled period of the contract - HELD THAT:- The Arbitrator took a view on the construction of the clauses of the contract that the firm price clause operated only with respect to the period for which the contract subsisted, and would not subsist beyond the scheduled period of the contract. The Arbitrator also noted that the appellant accepted the work undertaken by the respondent beyond the period of the contract without objections. The Arbitrator also carefully assessed the period of delay attributable to the appellant and awarded escalation to the respondent only for the same. The contractual clause stipulates only that the price would be firm during the period of execution of the contract , which the Arbitrator took to refer only to the 12 month period originally stipulated for the execution of the contract. This may appear to be a technical distinction, but it must be remembered that construction of a contract is in the domain of the Arbitrator, and as long as the interpretation given is a possible view, the Court may not interfere with the same - the view taken by the Arbitrator was a possible one, and cannot therefore be interfered with by the Courts. Any decision regarding the issue of whether an arbitrator can award a particular claim or not, will revolve on the construction of the contract in that case, the evidence placed before the arbitrator and other facts and circumstances of the case. No general principle can be evolved as to whether some claim can be granted or not. The judgments placed on record by the appellant, wherein claim for escalation was denied, have to therefore be read in the context of their facts, and cannot be read in isolation - the appellant has neither been able to point out any error apparent on the face of the record, nor otherwise made out a case for interference with the award by the Arbitrator with respect to this issue. Appeal dismissed.
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2021 (5) TMI 620
Seeking to review holding of examinations and declaring results by the ICAI - Allegation of Oppressive action of a professional body-ICAI - petitioner made many emotional comments, but the thrust of her e-mail was only to suggest that online infrastructure be developed so that all levels of CA Examinations be conducted online - result had been put on hold (by ICAI), because of derogatory remarks (as per the institute) she had made in her e-mail - Jurisdiction of Examination Committee to proceed against the petitioner and annul her examination - HELD THAT:- This Court finds that not only the initiation of proceedings against the petitioner, but also the manner in which, the proceedings have been conducted so also its culmination in cancellation of petitioner s result suffers from all the vices which have been voiced by Mr. Vikas Balia. They are without jurisdiction and against the principles of natural justice on one hand and capricious and arbitrary on the other. A perusal of the e-mail sent by the petitioner reveals that the same was addressed to Institute s President and other office bearers and not to the Examination Committee. Hence, the Examination Committee ought not have taken cognizance of an e-mail sent to the President of the Institute, unless the President directed it to do so - That apart, in the opinion of this Court, there is hardly anything in the e-mail, for which it can be alleged/ considered as or even construed to be derogatory. May be, the petitioner could have been more calibrated in her emotional utterness and could have avoided some of the sentences, but then also, this Court is unable to countenance respondents stand that the contents of her mail were derogatory. The very initiation of the proceedings against the petitioner alleging that the e-mail contains derogatory remarks was uncalled for and unwarranted. One cannot lose sight of the fact that on receipt of the notice dated 22.2.2021 itself, the petitioner had practically knelt down in subservience before respondent No.2 urging that she regretted her action and would not repeat the same in future. While apologizing in the said reply/letter, she had even gone to the extent of writing that I am truly ashamed of myself - As Voltaire said, With great power comes great responsibility . Thus, the Institute which is adorned with enormous power to elevate or uplift the lives of vulnerable struggling students, is required to practice greater restraint in invoking its powers especially against the students. Instant case called for not just restraint but absolute abstinence from initiating any action against the petitioner, particularly when she had submitted a beseeching response - Since there was no mentioning or even indication of cancellation of result neither in the e-mail dated 22.2.2021 nor in the subsequent communications, there remains not even an iota of doubt that the impugned order of cancelling the result is inherently illegal, falling foul to Article 14 of the Constitution of India and the same is liable to be quashed. The Institute of Chartered Accountants of India is a statutory body. Hence, its decisions, actions and adjudication are supposed to conform to the standards expected of State or instrumentality of a State. A State that suppresses freedom of speech and inflicts or imposes extreme punishment treating an act or attempt of criticism and/or if it treats any suggestion for improvement as a challenge to its authority or supremacy is a State, that disregards rather violates fundamental rights of a citizens guaranteed by Article 19(1)(a) of our Constitution - this Court has no hesitation in holding that the action of the Examination Committee was without jurisdiction; proceedings conducted by it were arbitrary and against the principles of natural justice and their culmination in the form of decision dated 9/10.3.2021 has been contrary to law. The writ petition is thus, allowed with the cost of litigation, quantified at ₹ 20,000/-.
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