Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 12, 2021
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Reopening of assessment u/s 147 - addition u/s 68 - The reasons for the formation of the belief by the Assessing Officer in the instant case, appear to have a rational connection with or relevant bearing on the formation of belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. Accordingly, no interference is called for at the hands of this Court in this petition under Article 226 of the Constitution of India. - HC
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Whether the non-deduction of tax at source (TDS) from the salaries of nuns or priests for more than 76 years confers a right against such deduction? - We are afraid that we cannot agree with the contentions put forward by the appellants. Since we have already found that the mandate of section 192 of the Act is clear that TDS has to be deducted from the salaries payable to nuns or priests, a contrary practise, which was contrary to the law of the land, cannot be permitted to be continued. - there cannot be any estoppel against law - HC
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TDS u/s 192 - Liability of tax deduction at source from the salary paid to teachers who are nuns or priests of the religious congregations - Chargeability to tax is not dependent on the manner of utilization of the income. The utilization of a person’s income may be a window for claiming a deduction or a refund, but, it is irrefutably not a ground to claim an exclusion from deduction of tax at source. At the time of deducting tax at source, the exigibility to tax or the quantum to be taxed are not matters of relevance. Under the scheme of the Act, those are matters to be considered subsequently, after the annual returns are filed. Thus we hold that section 192 of the Act obliges every person who makes a payment under the head ‘Salaries’ to deduct tax at source at the rates prescribed without fail. - HC
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Economic Offences u/s 276B against the petitioner - Failure to pay tax - Proceeding has to be quashed on both grounds, namely, that the petitioner was not a Director of the company at the relevant point of time and there are no allegations of any nature against the petitioner required under the provisions of Section 278B of the Income Tax Act, to rope the petitioner into the complaint. - HC
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Eligibility for deduction u/s. 80JJA - Whether IT company / engineers are eligible for deduction u/s. 80JJA? - a software engineer in a software industry is a workman within the meaning of Section 2(s) of the Industrial Disputes Act so long as the Software Engineer does not discharge any supervisory role. - The software engineer being workman having satisfied the period of 300 days, the assessee is entitled to claim deduction under Section 80JJAA - AT
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Depreciation disallowance on the power plant in respect of newly installed building, plant and machinery comprising of a captive thermal power plant which was not put to use - no doubt the availability of coal and water for purchasing of the power are to very relevant factors for production of power, however they may be relevant in determining the allowability of the power purchase price, but does not have any impact on the allowability of depreciation to the assessee on leased out assets - CIT(A) rightly allowed the claim - AT
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Bogus LTCG - penny stock purchases - it was only accommodation entries which is in operation in the market and the assessee is not a genuine buyer and seller of the shares - assessee has not justified the genuineness of the transaction. It is appropriate to come to the conclusion that the transactions undertaken by the assessee is fictitious transactions so as to take advantage of the sale. - Additions confirmed - AT
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Bogus LTCG - disallowing exemption u/s 10(38) - in the instant case suspension order in trading in securities of M/s Turbo Tech Engineering Ltd. has ultimately been lifted - SEBI has found no irregularities in the trading of such scrips; neither it has been found that the Directors are involved in any price rigging. - Additions deleted - AT
Customs
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Offences u/s 111(a) and 111(d) of the Customs Act, 1962 - Special Court can attract cases, which are arising out within the jurisdiction specified and in the rest of the area, Judicial Magistrate of concerned jurisdiction alone has got jurisdiction, as rightly contended by Mr. B.Vijay, Learned Counsel appearing for the First Respondent. - The Petitioner cannot misuse this forum in order to transfer of the case pending before the Judicial Magistrate-I, Thanjavur to Chennai and the Writ Petition is liable to be rejected - HC
Indian Laws
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Recognition and enforcement of foreign awards - Part II of the Arbitration and Conciliation Act, 1996 - Jurisdiction of District Judge to judge Foreign Award - There is no ground in the pari materia provisions of Section 34 to set aside such award on the ground that the substantive law of that country has been infracted. Indeed, the only ground on which such award could possibly be interfered with is if such award, valid under the law which it applied, could be held to be contrary to the public policy of India. - SC
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Dishonor of Cheque - acquittal of the accused - The trial court while considering the transaction has dealt it as if a civil case and casted burden on the appellant/complainant to prove the transaction ignoring the presumption under Section 139 of N.I.Act - The trial court committed an error apparent on the face of the records by casting burden on the appellant/complainant against the mandatory requirement under Section 139 of N.I.Act. - HC
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Dishonor of Cheque - validity of legal notice - the exact amount, which the appellant claimed for towards the dishonoured cheques was not mentioned in the legal notice, and the appellant has mentioned only the serial numbers, viz., Serial Nos. 3, 5, and 6 in respect of the dishonoured cheques. Therefore, this Court is of the view that the legal notice issued by the appellant does not satisfy the ingredients contemplated under Section 138(b) of the N.I. Act. - HC
IBC
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Initiation of CIRP - Corporate Debtor failed to make repayment of its dispute - Operational Creditors or not - NCLT had rightly rejected the application of Overseas after finding that there existed a dispute between Kay Bouvet and Overseas and as such, an order under Section 9 of the IBC would not have been passed. We find that NCLAT has patently misinterpreted the factual as well as legal position and erred in reversing the order of NCLT and directing admission of Section 9 petition. - SC
Service Tax
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Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - refusal to issue the Discharge Certificate - The Scheme being a piece of reformative legislation, ‘redemption fine’ that is a penalty in rem must clearly be shown to have been excluded from the meaning of the word ‘penalty’ used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the ‘redemption fine’/penalty in rem. In absence of any provision to exclude ‘redemption fine’/ penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, ‘redemption fine’ would always remain a ‘penalty’ covered under the meaning of that word used in section 129 (1) (a) read with section 121 (u) of the Scheme. - HC
VAT
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Priority of Charge - First Right of secured creditor and Sales Tax Department - There is encumbrance of the Department of Sales Tax. The Registering Officer shall have to ascertain whether the requisite permission from the Competent Authority under the relevant enactment has been obtained and is required to annex the said permission, if it is prohibited. The Registering Officer will also have to ascertain whether the document presented for registration is contrary to any of the terms and conditions mentioned in the NOC granted by the Competent Authority. Undisputedly, in the present matter, the respondents have not shown any such statutory prohibition which enables the Registering Officer to refuse registration of the sale certificate. - HC
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Availability of sales tax exemption - Indeed it is trite that it is the DIC which is the appropriate authority to determine whether a certain SSI unit needs to be granted eligibility from payment of sales tax in terms of the IPR 1989. The certificate so issued by the DIC cannot be brushed aside by the Sales Tax Department - HC
Case Laws:
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Income Tax
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2021 (8) TMI 445
Reopening of assessment u/s 147 - addition u/s 68 - failure on the part of the assessee to fully and truly disclose all the facts necessary for assessment proceeding under section 143(3) - HELD THAT:- AO has found that the petitioner company has not fully and truly disclosed all material facts necessary for assessment for the reason that the petitioner has concealed the fact that the investor companies are shell companies, to channelize the unaccounted funds into assessee company. As observed by the AO that the assessee has misreported his unaccounted income as capital receipt in the form of share application money to avoid instance of tax - there is clear failure on the part of the assessee to fully and truly disclose all the facts necessary for assessment proceeding under section 143(3) of the Act and that, there is no substance in the contention raised by the learned senior advocate for the petitioner with regard to the change of opinion by the AO. Incorrect facts have been recorded in the reasons recorded, the AO has commented that the identity of a company has to be seen in a holistic sense and mere existence of paper concern with Directors just for namesake, is not establishment of identity. The identity comprises of actual business of the investor and in the case on hand, Shri Narayan Patodia was unable to establish that he had carried out any actual business - a perusal of the record reveals that the investor companies are found to be shell/paper companies. In this regard, the report of the Commission under section 131 of the Act sent to Kolkata as well as physical entry done by the Inspector of this Range established that at the registered address of the company, no business was being carried out and in fact, the address of the company was a residential premises. Thus we are of the considered view that it cannot be said that there is no reason to believe that the income chargeable to tax has escaped assessment because such exercise of reopening has been made only after due inquiries and recording of statements of concerned persons, as referred to herein above, and on having found prima facie material, impugned notice is issued to the petitioner. AO has reason to believe that the investor companies are not in existence and basis for formation of such belief is several inquiries and the investigation by the Investigation Wing, Kolkata and report thereof. The reasons for the formation of the belief by the Assessing Officer in the instant case, appear to have a rational connection with or relevant bearing on the formation of belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. Accordingly, no interference is called for at the hands of this Court in this petition under Article 226 of the Constitution of India. The department has observed that a cash flow cited by the assessee is with regard to unsecured loan, not with regard to share application money. On unsecured loan, the borrower has to pay the interest and the lender receives substantial income from the loan advanced, however, in the case of the assessee, the investor receives no return on his investment and the money given by the investor is justlying unproductively with the assessee. Further, during subsequent investigation, the investor companies found to be the shell/paper companies. Accordingly, in the said facts and circumstances of the case on hand, the decision relied upon by the learned senior advocate for the petitioner would be of no help to petitioner. - Decided against assessee.
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2021 (8) TMI 443
Validity of the notice issued u/s 148 - non deduction u/s 195 - assessee has made payments to Associated Enterprise for shared service/cost sharing expenses - HELD THAT:- The facts of the case as narrated in the Appellate order would reveal that Assessment u/s.143(3) has been completed for A.Y.2011-12 after disallowing payments made to BASF Malaysia towards shared legal / administrative services u/s.40(a)(i) for failure to deduct tax at source u/s.195. The difference is that the disallowance of payments related to BASF Malaysia is stated in the appeal and the extent of disallowance is mentioned as ₹ 1,08,78,548/-. - in the reasons furnished for reopening in proceedings dated 12.10.2018 would state that the income escaped is ₹ 3,72,07,000/-. Therefore, there is a mismatching between the subject dealt with by the Appellate authority as well as the reasons furnished for reopening of assessment. Petitioner made an attempt to clarify certain transactions for the purpose of establishing that the subject matter is one and the same and the issue was relatable to the transactions from various countries. If the facts also, it is for the petitioner / assessee to place all such records before the Assessing Officer. Mere reopening of cannot be construed as conclusive. Still, the petitioner would get an opportunity to clarify these aspects and establish that there was no suppression or failure on the part of the assessee to furnish true and full disclosures. However, High Court cannot adjudicate these disputed aspects. Once there is a prima facie reason for reopening of assessment, which is essential under the provisions of Section 147 of the Act, rest of the adjudications are to be completed in all respects by affording opportunity to the assessee concerned. The initiation of proceedings cannot be crippled merely based on certain clarifications. Such clarifications as well as the documents relied upon are to be adjudicated in detail by the Assessing Officer for the purpose of arriving a decision during the course of 147/148 proceedings. This being the factum established, this Court is of the considered opinion that the petitioner has to co-operate for the completion of the assessment / reassessment proceedings by availing the opportunities to be provided and the respondents are bound to complete the proceedings as expeditiously as possible.
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2021 (8) TMI 442
Book profits for the purpose of determining deemed income u/s 115JA - inclusion/exclusion of provision on account of lease equalization charges - HELD THAT:- The explanation to sub-section (2) provides that for the purposes of this section book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by the amounts mentioned in clauses (a) to (g). In the instant case, the assessee made a provision on account of lease equalization charges. The aforesaid provision was made for meeting the liabilities other than the ascertained liabilities as provided in clause (g) of explanation to sub-section (2) of Section 115JA of the Act. This amount which was earmarked as a provision of diminution in the value of the asset for the purposes of arriving at book profit under Section 115JA of the Act, ought to have been included in view of retrospective operation of clause (g) to sub-section (2) to Section 115JA of the Act. Similar view has been taken by another Division Bench of this Court in COMMISSIONER OF INCOME-TAX Vs. WEIZMANN HOMES LTD . [ 2013 (5) TMI 123 - KARNATAKA HIGH COURT] Tribunal has rightly held that the aforesaid amount has to be added back to book profits for the purpose of determining deemed income under Section 115JA of the Act as it is specifically authorized by clause (g) to sub-section (2) to Section 115JA of the Act. - Decided in favour of revenue.
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2021 (8) TMI 441
Validity of assessment - Non grant of personal hearing - HELD THAT:- In response to the notice which petitioner had received under sub- Section 1 of Section 142 of the Income Tax Act, 1961, petitioner had submitted its statement of affairs as on 31st March 2018 to which is annexed the balance sheet and one of the liabilities mentioned is loan - We feel if a personal hearing had been granted, petitioner could have cleared this doubt of the assessing officer. In the circumstances, we hereby set aside the impugned order and remand the matter back to the adjudicating authority, who shall after giving a personal hearing to petitioner, within six weeks from the date of receipt of the order, pass such orders as he deems fit in accordance with law. Petitioner is at liberty to forward a copy of this order through the e-filing process and also by hand delivery/speed post/courier/e-mail. We hasten to add that we have not made any observation on the merits of the matter.
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2021 (8) TMI 440
Deemed dividend addition u/s 2(22)(e) - CIT(A) deleted the addition of deemed dividend simply accepting the submissions made by the assessee - as per ITAT there is no evidence on record to show that this loan was to be utilized only for purpose of business of the company or in any other manner, these facts go to prove that these amounts were advanced as gratuitous loan to the shareholders and provisions of section 2(22)(e) are squarely applicable - HELD THAT:- When a loan is advanced by a company to a registered share holder and other conditions mentioned in Section 2(22)(e) of the Act having been satisfied, the amount of loan has to be treated as deemed dividend within the meaning of Section 2(22)(e) of the Act. Tribunal while recording the aforesaid finding and while reversing the finding recorded by the Commissioner of Income Tax (Appeals), has not taken into account the ledger report, certificates issued by a standard chartered bank, books entries as well as the provisions of the agreements dated 22.11.2005 and 24.12.2005. Since the issue with regard to applicability of Section 2(22)(e) of the Act requires factual adjudication, the order dated 12.08.2016 passed by the Tribunal is quashed and the matter is remitted to the Tribunal for decision afresh after taking into account the material available on record. It is therefore not necessary for us to answer the substantial questions of law.
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2021 (8) TMI 437
Condonation of delay - delay of 350 days in filling appeal before the Tribunal - HELD THAT:- The reasons assigned by the assessee for the delay in filing the appeal is that the impugned order dated passed by the CIT (Appeals) was delivered to the assessee some time in the September 2015 and immediately after receipt of the said order, the assessee had supplied the order passed by the Commissioner of Income Tax (Appeals) to the office of the Auditor so far as to take action for filing of an appeal. It is the case of the assessee that the aforesaid order was not brought to the notice of the Chartered Accountant namely Rajendra Karnavat by his staff, and the same remained in his office files without any action. The appellant thereupon made an enquiry and learnt about the fact on 7.10.2016 that the appeal has not been filed and the appellant took action to contact another Chartered Accountant and filed the appeal thereon. The appellant in the facts and circumstances of the case should not suffer on account of inadvertence on the part of her Chartered Accountant. Thus, assessee has made out sufficient cause to condone the delay of 310 days in filing the appeal before the Tribunal.
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2021 (8) TMI 435
TDS u/s 192 - Liability of tax deduction at source from the salary paid to teachers who are nuns or priests of the religious congregations - Whether the writ petitions were maintainable? - HELD THAT:- The religious congregations are not in receipt of any amount as salary. In the eyes of law and that of the income tax department, tax deduction at source is to be effected from the salary paid to the employee of the Government. The religious congregations have no role in that whatsoever. The religious congregations are not employees. In such circumstances, we are of the firm view that, the writ petitions filed by the religious congregations were not maintainable except for those filed by the nun and priests individually. Taking into perspective the importance of the questions raised and the fact that the maintainability of the writ petitions was not questioned seriously, we consider the questions raised in these appeals on merits. We are also persuaded to consider the questions not only due to their importance but also because, a nun and three individual priests are even otherwise before this Court raising the same challenge. We hold the writ petitions to be maintainable in the peculiar circumstances of the cases. Whether salaries paid to nuns and priests, who are employees of educational institutions, are liable for tax deduction at source? - Section 192 of the Act does not contemplate any exemption from the liability to deduct tax at source on the basis of the nature of calling, profession, or vocation of the person who receives the salary. The statute makes it an obligation upon the person who pays the salary to deduct tax, at the time when payment of salary is made. As per the statutory scheme, the sole focus under section 192 of the Act, upon the person paying the salary, is whether the income is chargeable under the head 'Salaries'. If the income payable will fall under the head 'Salaries', the statute attaches an obligation to the person paying the salary to deduct TDS. While deducting the TDS under section 192 of the Act, the person deducting it, is not obliged to or required to ascertain the nature of calling or vocation of the assessee or utilization or application of the income by the assessee. Chargeability to tax is not dependent on the manner of utilization of the income. The utilization of a person s income may be a window for claiming a deduction or a refund, but, it is irrefutably not a ground to claim an exclusion from deduction of tax at source. At the time of deducting tax at source, the exigibility to tax or the quantum to be taxed are not matters of relevance. Under the scheme of the Act, those are matters to be considered subsequently, after the annual returns are filed. Thus we hold that section 192 of the Act obliges every person who makes a payment under the head Salaries to deduct tax at source at the rates prescribed without fail. Whether the principle of diversion of income by overriding title applies to the salary received by nuns and priests? - They act as managers of educational institutions, hospitals and other establishments. They enter into contracts for manifold purposes. In all these spheres, they act like any other living human. In such a scenario, we are of the firm view that the concept of civil death under the canon law, not only stands eclipsed but has no relevance vis-a-vis the taxing statutes. We are a nation governed by the rule of law. The concept of civil death is alien to the Income Tax Act and the same cannot be incorporated into the statute book through any mode of interpretation. The civil death contemplated under our rule of law is only the civil death provided for in section 108 of the Indian Evidence Act, 1872. Thus, the reliance upon the concept of civil death of nuns and priests under canon law, to avoid deduction of tax at source, cannot be of avail to the appellants. After the coming into force of the Constitution, the exigibility to tax is governed and controlled by the respective taxing statutes and not by the canon law. Canon law, cannot relieve the legal obligations/duties created under the various legislations enacted by the legislature. We are therefore in complete agreement with the learned Single Judge that the principle of diversion of income by overriding title has no application to the salary paid to nuns or priests by the Government or any other employer. Whether the circulars of 1944 and 1977 are valid? If yes, do they exclude salaries of nuns or priests from TDS? - The contention that the practice had the effect of recognizing an underlying principle, according to us, has no basis. As mentioned earlier, under the scheme of the Act, there cannot be an exemption or exclusion of income from chargeability, otherwise than by the taxing statute. Since the statute has not provided for any such exemptions or exclusions for a certain category of persons like nuns or priests, the circulars cannot exclude or exempt the obligation created under section 192 of the Act. We are therefore of the firm view that the 1944 circular or even the 1977 circular cannot be construed as excluding tax deducted at source from the salaries received by the nuns or priests from their respective. Whether deduction of tax at source from the salaries payable to nuns or priests violates Article 25 of the Constitution of India? - While considering this contention, we bear in mind the perspective that the right under Article 25 is not an absolute or an unfettered right. Article 25 does not provide any immunity from taxation on the basis of religion. The right is subject to public order, which term has a wide connotation. One of the facets of public order is the law of the land. A valid piece of legislation and its compliance is part of public order under Article 25 of the Constitution. Payment of taxes imposed under a validly enacted legislation is an essential attribute of public order. Thus, if a valid law permits deduction of tax at source, we find ourselves at a loss to assimilate the scope of the contention that deduction of tax at source violates the fundamental right to freedom of religion. We reject the said contention. Whether the non-deduction of tax at source from the salaries of nuns or priests for more than 76 years confers a right against such deduction? - The appellants contended that the non collection of TDS all these years have vested a legitimate expectation and a right upon them - We are afraid that we cannot agree with the contentions put forward by the appellants. Since we have already found that the mandate of section 192 of the Act is clear that TDS has to be deducted from the salaries payable to nuns or priests, a contrary practise, which was contrary to the law of the land, cannot be permitted to be continued. As held in the decision in Joshi Technologies International Inc. v. Union of India and Others [ 2015 (5) TMI 521 - SUPREME COURT] and several other decisions, there cannot be any estoppel against law. Hence we reject the said contention too. As referred to the decision of the Madras High Court in Union of India v. Society of Mary Immaculate (Tamil Nadu), Madras [ 2019 (3) TMI 1253 - MADRAS HIGH COURT] where after taking note of the judgment of the learned Single Judge impugned in these appeals, agreed with the learned Single Judge of this Court. We too, agree with the conclusions reached by the learned Single Judge in the impugned judgment as well as in the aforecited decision of the Madras High Court. We hold that this judgment shall apply only with prospective effect and not for any earlier periods. This direction is issued not on the basis of any proclaimed right of the nuns or priests, but solely on account of the admission of the department that they had not, by a mistake/omission failed to properly instruct the collection of TDS at source prior to 2014. From 2014 till date, this Court had interdicted collection of tax at source also.
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2021 (8) TMI 432
Economic Offences u/s 276B against the petitioner - Liability of directors - Failure to pay tax to the credit of Central government under Chapter XIID or XVIIB - Offences by companies u/s 278B - HELD THAT:- In the present case, the DIR-12 Form produced by the petitioner shows that she had resigned as a Director of the accused No.1 company on 17.02.2016 itself. As such, she cannot be prosecuted on the ground that she is a Director of the Company at the relevant point of time. The complaint does not have a single averment about any of the persons said to be Directors of the 1st accused Company. In view of the aforesaid Judgments of National Small Industries Corporation Limited vs. Harmeet Singh Paintal and another [ 2010 (2) TMI 590 - SUPREME COURT ] the proceedings against the petitioner in C.C.No.80 of 2019 on the file of the IV Additional District Judge-cum-Special Judge, Economic Offences Court at Visakhapatnam under Section 276B of Income Tax Act, 1961 has to be quashed on both grounds, namely, that the petitioner was not a Director of the company at the relevant point of time and there are no allegations of any nature against the petitioner required under the provisions of Section 278B of the Income Tax Act, to rope the petitioner into the complaint. Accordingly, the criminal petition is allowed quashing order of Additional District Judge-cum-Special Judge, Economic Offences Court at Visakhapatnam under Section 276B of Income Tax Act, 1961 against the petitioner herein.
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2021 (8) TMI 430
Bogus sales - unaccounted income - CIT(A) deleted the additions - Revenue contended that, onus of establishing genuineness of transaction was on the assessee which it failed - HELD THAT:- CIT(A) has given a detailed finding that nothing has been found during survey to conclude that the assessee is generating additional unaccounted income. In-fact, all the details relating to the sales as well as purchases were given during the assessment proceedings and the books were not at all rejected by the AO, which was properly maintained by the assessee. Hence, there is no need to interfere with the findings of the CIT(A). Thus, the appeal of the Revenue does not survive. Assessee has filed appeal under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 relating to the contrary findings given by the CIT(A) to the factual aspect of the evidences produced before the Assessing Officer as well as before the CIT(A). As regards the observation of the CIT(A) that sales are bogus are contrary to the findings of the CIT(A) in the order itself as well as while going through the records also the sales are properly explained by the Assessee before the Revenue authorities. When we looked into the evidences, we found that all the entries as well as bills and vouchers of each transaction along with transportation receipts and details were meticulously given before the Assessing Officer as well as before the CIT(A). The observation made by the CIT(A) is contrary to the records. Thus, we allow application filed by the assessee under Rule 27 of the Income Tax Rules, 1963. Appeal of the Revenue is dismissed.
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2021 (8) TMI 429
Addition u/s 40A(2)(b) - purchases from related party - assessee failed to satisfy the AO as to whether the price paid for the goods purchased from M/s MSA Engineering Pvt. Ltd was at arms length or not? - genuineness of purchases was not established by the assessee - HELD THAT:- When ld. CIT (A) has arrived at the factual finding that assessee himself has not transported the goods nor carried out loading and unloading, the findings returned by the AO that the transfers made by the assessee are merely book entries are not sustainable. AO is blowing hot and cold in the same breath because at one point of time he has observed that transactions made by the assessee are only book entries and not genuine business transactions but at the same time recalculated the net profit at 1.5% of the sales turnover by rejecting the books of account which is not permissible under law. AO also stated that since M/s. MSA Engineering Pvt. Ltd. was a related party the tax auditor should have pointed out it out in tax audit report u/s 40A(2)(b) of the Act but at the same time has resorted to section 40A(2)(b) to observe that the purchases from M/s. MSA Engineering Pvt. Ltd. were not made at arm s length. When the factual findings have come on record that assessee has not been transporting, inspecting, loading and unloading of goods, the findings given by AO are based upon conjectures and surmises. CIT (A) has rightly deleted the recalculated profit @ 1.5% and has allowed the salary of manager and a few executives and disallowed the remaining expenses - Decided against revenue.
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2021 (8) TMI 428
Assessment u/s 153A - undisclosed income and undisclosed assets - Addition u/s 68 - HELD THAT:- We find ourselves in agreement with the above contention. Even revenue acknowledged this in the ground of appeal, wherein it is submitted this department has not accepted the order of CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD., ALL CARGO GLOBAL LOGISTICS LTD. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] and appeal has been preferred to Hon ble Supreme Court. We do not find this any reason to interfere with order of Ld.CIT(A) on this issue. Hence, we hold that Ld.CIT(A) is correct in holding that assumption of jurisdiction u/s 153A is bad in absence of any incriminating material found in search, as this is not a non abated assessment. As regards the merits, we find that since the issue on jurisdiction has been decided in favour of assessee, adjudication on merits is order only of academic interest. Hence, we are not engaging in the same. Revenue appeal is dismissed.
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2021 (8) TMI 426
Eligibility for deduction u/s. 80JJA - Whether IT company / engineers are eligible for deduction u/s. 80JJA? - Whether the deduction is allowable if the employees are employed for less than 300 days in any previous year? - HELD THAT:- As decided in [ 2021 (1) TMI 923 - KARNATAKA HIGH COURT ] ITA No.340/2014 software professional/engineer is a workman within the meaning of Section 2(s) of ID Act, so long as such a software professional does not discharge supervisory functions, the benefit of Section 80JJ-AA can be claimed by an ennployer/assessee even if the employee were not to complete 300 days in a particular assessment year but in the subsequent year so long as there is continuity of employment, the Assessee could continue to claim further benefit in the next two years as provided in under Section 80JJ-AA of the Act. Accordingly, we answer Question No.1 by holding that a software engineer in a software industry is a workman within the meaning of Section 2(s) of the Industrial Disputes Act so long as the Software Engineer does not discharge any supervisory role. The period of 300 days as mentioned under Section 80JJAA of the Act could be taken into consideration both in the previous year and the succeeding year for the purpose or availing benefit under Section 80JJAA. It is not required that the workman works for entire 300 days in the previous year. The software engineer being workman having satisfied the period of 300 days, the assessee is entitled to claim deduction under Section 80JJAA - Decided in favour of assessee.
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2021 (8) TMI 425
Disallowance u/s. 43B in respect of TDS/GST/PF/ESI amounts outstanding on 31/03/2018, deposited by the assessee company by 7th of April 2018 - disallowance u/s. 37 on the basis of the detailed report in Form No. 3CD - HELD THAT:- As seen from the submission of the assessee that it contains factual information that goes to the root of the matter. Hence, hereby set aside the impugned order and restore the grounds of appeal alongwith the evidences annexed with the Paper Book to the file of CIT(A). CIT(A) is, therefore, directed to decide the issue afresh after considering the factual information submitted by the assessee in the form of challans of payment of GST, TDS, EPF and ESI. The grounds of appeal raised by the assessee are thus, allowed for statistical purposes only. Appeal of the assessee is allowed for statistical purposes.
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2021 (8) TMI 424
Disallowance u/s 14A r.w.r 8D or 37(1) - before the AO, it was submitted that this amount pertains to the interest cost utilized for granting ICDs to group companies and the interest earned thereof has been duly offered to tax as the business income - AO did not accept the contention of the assessee and held that the company failed to prove that the interest bearing fund was granted as loan to the group companies - HELD THAT:- The expenditure must be directly and intimately connected with business laid out by the assessee in his capacity as a trader. To be a permissible deduction, there must be a direct and intimate connection between the expenditure and the business. Ordinarily it is for the assessee to decide whether a certain expenditure should be incurred during the course of his business and if such expenditure has been incurred for promoting the assessee's business and earning profits, the assessee can claim a deduction of the expense under section 37(1) of the Act. Respectfully following the ratio of decision of the Apex Court in the case of CIT vs. Delhi Safe Deposit Co. Ltd. [ 1982 (1) TMI 2 - SUPREME COURT] thus hold that the interest expense has been incurred by appellant in respect of earning taxable income. Appeal of the revenue is dismissed.
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2021 (8) TMI 422
Depreciation disallowance on the power plant in respect of newly installed building, plant and machinery comprising of a captive thermal power plant which was not put to use in the financial year 2004 05 - HELD THAT:- The power plant was existence on 26th of March 2005 ready to be used, leased out to another entity, shows that the assets are owned by the assessee and are used in the leasing business of the assessee and therefore the assessee is entitled to the depreciation on the same. When the assets are leased out by lessor to lessee, to claim the depreciation by the lessor on assets owned by it, it is not necessary that lessee should have used that particular asset for the business of the lessee - lease agreement and power purchase agreement are not held to be sham by the AO but it is only disputed the retrospective applicability in both these agreements, i.e. both these agreements were entered into on 24th of March 2005, made it applicable from 15th of March 2005. We do not find any reason to disallow the depreciation in the hands of the assessee. It is also to be seen that the Keshav Power Ltd has deposited a sum of ₹ 60 crores as security deposit. No doubt, this clause was not there in the lease deed entered into - this fact does not impact the allowability of this allowability of depreciation on the power plant in the hence of the assessee for assessment year 2005 06 - no doubt the availability of coal and water for purchasing of the power are to very relevant factors for production of power, however they may be relevant in determining the allowability of the power purchase price paid by the assessee to Keshav Power Ltd, but does not have any impact on the allowability of depreciation to the assessee on leased out assets. In view of this, we find no infirmity in the order of the learned CIT- A in deleting the disallowance of depreciation to the assessee on power plant which is leased out by the assessee in its business of leasing to Keshav Power Ltd during financial year 2004 05 relevant to assessment year 2005 06. Accordingly ground number 1 of the appeal of the learned assessing officer is dismissed. Allowability of the power charges paid by the assessee to Keshav Power Ltd. - HELD THAT:- We have not been shown any clause in the power purchase agreement that when assessee does not produce any unit of the power, the minimum off take requirement obligation of the assessee would trigger and assessee is required to pay Keshav Power Ltd minimum off take power bill. Further this is evident that assessee has shown that it would be beneficial for it to buy power from Keshav Power Ltd then to consume power from Tamil Nadu Electricity Board. Even then assessee does not purchased power from Keshav Power Ltd is clearly evident because the Keshav Power Ltd has not produced any unit of the power. We do not agree with the order of the CIT A in allowing even the proportionate amount of power charges to the assessee wherein there is no production of power by the supplier. Merely because Keshav Power Ltd has a power plant from which no power is produced, and assessee willingly pay something to Keshav Power Ltd, such payment made by the assessee does not become allowable in the hence of the assessee. It is immaterial whether such income is offered to taxation by the Keshav Power Ltd. In the result we reverse the order of the learned CIT A, restores the order of the learned assessing officer disallowing the power purchase price and allow ground of the appeal of the AO. Written down value of the power plant on which depreciation is to be granted - HELD THAT:- This issue has already been decided in the case of the assessee for assessment year 2005 06 by this order. The learned assessing officer is directed to compute the written down value of the power plant after granting assessee depreciation on power plant at respective rates and then compute the written down value on which the depreciation should be granted in this assessment year. Accordingly this ground of appeal does not survive. Therefore same is allowed for statistical purposes. Disallowance of expenditure incurred by the assessee on payment of power charges - AO disallowed the above charges holding that the whole transaction of leasing of the power plant as well as the power purchase agreement between the assessee and Keshav Power Ltd is sham - HELD THAT:- Now it is an established fact that assessee has purchased power from power plant leased out to Keshav Power Ltd at the competitive rate which are neither excessive not unreasonable, therefore there is no reason that why this power purchase expenditure incurred by the assessee should be disallowed. Accordingly we direct the learned assessing officer to delete the disallowance being power purchased by the assessee from Keshav Power Ltd. Thus ground number 2 of the appeal is allowed. Disallowance of payment made for conducting Hindi classes to one organization and payment for supply of milk and maintenance of the guidance - HELD THAT:- Both these expenditure are also been considered by the learned CIT A incurred wholly and exclusively for the purposes of the business of the assessee as well as the same are also covered by the decision of the coordinate benches in earlier years in the assessee‟s own case where expenditure of similar nature are allowed. The learned departmental representative could not show us any reason to deviate from the decision of the learned CIT A. accordingly we confirm his order. Disallowance of depreciation on water works and water installation system - AO held them as part of building and allowed depreciation at the rate of 10% whereas the assessee claimed that this is part of plant and machinery and therefore depreciation should be allowed at the rate of 25% - HELD THAT:- CIT A also allowed the depreciation to the water works and water distribution installation at the rate of 25% as the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee‟s own case for assessment year 1986 1987. Therefore we do not find any infirmity in the order of the learned CIT A. Accordingly ground number 3 of the appeal of the learned assessing officer is dismissed. Disallowance u/s 14A - mandation of recording satisfaction - HELD THAT:- AO at the time of making a disallowance has just stated that the assessee has earned dividend income and long-term capital gain which is exempt and therefore the provisions of Section 14 A read with rule 8D applies and straight away proceeded to make disallowance. At the time of making the final edition, he merely reduced the total addition by Suo Motu disallowance made by the assessee. Therefore it is apparent that AO has not recorded any satisfaction with respect to the correctness of the claim of the assessee of incurring expenditure for earning of exempt income. Such is the mandate of honourable Delhi High Court in case of CIT V Taikisha engineering Co Ltd [ 2014 (12) TMI 482 - DELHI HIGH COURT] - Appeal of the assessee are allowed. Disallowance u/s 14 A for the purpose of computation of the book profit u/s 115 JB - motive the amount of the administrative expenditure incurred by the assessee for earning of the exempt income - HELD THAT:-The assessee itself has SUO Moto considered a sum of ₹ 5 lakhs as expenditure incurred by it for earning the exempt income. As the issue involved before us is pertaining to assessment year 2007 08 which is related to the period prior to 15 years from today, this is the last assessment year where the provisions of rule 8D are not applied, therefore in the interest of justice we uphold that a sum of ₹ 5 lakhs which is also admitted by the assessee by making a disallowance Under the provisions of Section 14 A incurred by the assessee for earning of the exempt income, is also required to be added to the book profit of the assessee u/s 115JB of the income tax act.
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2021 (8) TMI 421
Exemption u/s 11 - withdrawal of registration under s.12AA of the Act granted to the assessee earlier and consequent denial of benefits accruing from such registration - information received by the department from its counterpart i.e. CIT(E), Kolkata that the donor to the assessee are indulging in money laundering through receipt of bogus donation from various corporates and non-corporates - Addition as reliance of statement obtained in the course of survey proceedings in the case of the donor - HELD THAT:- It is a settled principle of law that the onus lies on the person who alleges untruthfulness against the other persons. In the instant case, the allegation has been made on behalf of the Revenue for adversial conduct of the assessee. It is thus the duty of the Revenue to comply with the sacrosanct principles of natural justice and grant opportunity to the assessee for rebuttal of evidences in possession of the Revenue. The registration already granted cannot be withdrawn arbitrarily and in a light hearted manner giving retrospective effect. All pleas noted above and other arguments and position of law that were canvassed on behalf of the assessee requires proper appraisal and disposal thereof in an objective manner - order of the CIT(E) requires to deal with various pleas of the assessee raised to defend the registration granted. The doctrine of legitimate expectations demands that the assessee should be made privy to the tangible evidences in corroboration of statement sought to be relied upon. Similarly, the cross examination of deponent s statement is incumbent to prevent miscarriage of justice. As told in the open Court, the re-registration application of the assessee has been accepted by the Revenue recently and registration has been granted from a prospective date. All these facts require proper consideration. CIT(E) while cancelling the registration appears to have wrongfully placed the onus of proving bonafides of donations on the assessee without showing reasons/evidence for drawing adverse conclusion on a registered trust. The imperatives of basic procedure have not been adhered while resorting to drastic action of cancellation. We accordingly set aside the impugned cancellation order and restore the issue back to the file of the CIT(E)/competent authority to pass a speaking order in this regard - Appeal of the assessee is allowed for statistical purposes
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2021 (8) TMI 420
Disallowance u/s. 40(a)(ia) - assessee paid professional fees legal fees without deduction of tax at source - addition was confirmed by Ld. CIT(A) - HELD THAT:- AR seek benefit of second proviso to Sec. 40(a)(ia) by submitting that the respective payees has offered this income in their return of income and paid due taxes thereupon and therefore, the disallowance is not sustainable. We concur with these submissions of Ld. AR. Accordingly, we restore this issue to the file of Ld. AO with a direction to the assessee to adduce requisite evidences/documents to show the fulfillment of the requirement of second proviso to 40(a)(ia) read with first proviso to Section 201(1). This ground stand allowed for statistical purposes. Disallowance on account of mismatch in receipts as reflected by the assessee vis- -vis receipts as reflected in Form No. 26AS - HELD THAT:- AR reiterated that difference arises due to the fact that billing was erroneously done in the name of group concern. The Ld. AR also placed on record reconciliation, Form 26AS and ledger accounts in support of the submissions. Prima-facie, the arguments of Ld. AR has strength. The dispute is a matter of reconciliation only. Therefore, we direct Ld. AO to re-verify the above claim after appreciating the relevant documents as placed on record. If the billing is done in other name and the same has already been accounted for by the assessee as business receipts, the same could not be added again. This ground as well as the assessee's appeal stand allowed for statistical purposes. Addition u/s. 40A(3) - Disallowance of capital expenditure - expenses were mostly in the nature of labour charges paid by assessee on behalf of the principal in cash - HELD THAT:- Assessee has incurred expenditure on behalf of its principal and claimed the reimbursement of the same which is evidenced by the ledger account as placed on record. The net agency commission earned by the assessee has been credited to its Profit Loss Account. We find that stated expenditure is in the nature of petty labour charges which has been incurred by the assessee on behalf of its principal. Similar issue arose in assessee's case for AY 2007-08 wherein the bench, in para 6 of the order, held that the provisions of Sec. 40A(3) would not be attracted to such payment. There is no new material before us to deviate from the earlier view of the bench. Facts are pari-materia the same in this year. Since Ld. CIT(A) has merely followed the order of Tribunal, no fault could be found in deleting the impugned addition. By confirming the stand of Ld. CIT(A), we dismiss the appeal of the revenue.
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2021 (8) TMI 419
Reopening of assessment u/s 147 - addition u/s 68 - insertion of Explanation 3 to Section 147 - HELD THAT:- A perusal of the assessment order shows that the two additions made by the Assessing Officer while completing assessment order were on the basis of the detailed investigations carried out by the Investigation Wing which came to the notice of the Assessing Officer during scrutiny assessment proceedings. It can be seen that the computation of assessed income is totally devoid of any addition which was the basis for the Assessing Officer to believe that income has escaped assessment i.e. ₹ 95 lakhs. This insertion of Explanation 3 to Section 147 of the Act has been examined and interpreted by the Hon'ble High Court of Bombay in the case of CIT Vs. Jet Airways [I] Ltd.[ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and held that Assessing Officer has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of the Hon'ble High Court of Bombay [supra] it would not be open to the Assessing Officer to assess income under some other issue independently. - Decided in favour of assessee.
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2021 (8) TMI 418
Bogus LTCG - penny stock purchases - HELD THAT:- In view of the Investigation on done by the Investigation wing regarding the penny stocks syndicate and the assessee indulging in trading in penny stocks, the modus operandi is that the share of this penny stock companies although listed on exchange was always closely held and controlled by the promoters of penny stock companies and the operators syndicate arrange these bogus Gain/Loss. This is due to the fact that the general public is not interested in the shares as these companies have no credentials and this helps the operator to keep a control on the price movements of the shares. Once the period of 1 year has been passed and the shares prices have been sufficiently rigged, the beneficiary sell their share at the inflated prices through the stock exchange. Here the purchase is not mode by public but by the bogus entities managed and controlled by the promoters of the penny stock company or the operators who are to be referred to as exit providers. All these are sham transactions. It is therefore, revealed that large scale rigging of prices of the above scrip has taken place and it is on the watch list of the SEBI trade data. In this regard, summons was also issued to Sri Bharath M Jain, director of the assessee company on 14.12.2016, to appear before the undersigned and a sworn statement of Sri Bharath M. Jain was recorded u/s. 131 of the Income Tax Act, 1961 on 16/12/2016. AR admission that the above fact that such dubious tradings were rampant during the assessment year. However, it cannot lead to the conclusion that that the transactions of the assessee are not genuine. It cannot be accepted in the circumstances of the case that all scrips purchased by the assessee sold at astronomical loss were commensurate to the financials of the company. Thus it shows that it was only accommodation entries which is in operation in the market and the assessee is not a genuine buyer and seller of the shares - assessee has not justified the genuineness of the transaction. It is appropriate to come to the conclusion that the transactions undertaken by the assessee is fictitious transactions so as to take advantage of the sale. Appeal of the assessee is dismissed.
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2021 (8) TMI 417
Bogus LTCG - disallowing exemption u/s 10(38) - HELD THAT:- In the instant case suspension order in trading in securities of M/s Turbo Tech Engineering Ltd. has ultimately been lifted by the adjudication order dated 25.11.2014 wherein SEBI has found no irregularities in the trading of such scrips; neither it has been found that the Directors are involved in any price rigging. Considering the entire facts of the matter, the judgment passed by the different Judicial Forums as relied upon by the Ld. AR and the Ld. DR as well, the particular judgment passed by the Hon ble Delhi Bench [ 2021 (1) TMI 1008 - DELHI HIGH COURT] dealing with the scrips of the same company namely M/s. Lifeline Drugs Pharma Ltd. on the identical set of facts deciding the issue in favour of the assessee, the judgment passed by the Hon ble Delhi High Court in the matter of PCIT vs. Smt. Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] we with the above observation do not hesitate to allow the claim made by the appellant towards LTCG in the absence of contrary evidence produced by the Revenue on record. The appeal filed by the assessee is, thus, allowed.
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Customs
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2021 (8) TMI 434
Offences u/s 111(a) and 111(d) of the Customs Act, 1962 - Seeking implementation of Government Order in G.O. Ms. No. 1293, dated 24.05.1982 issued by the Home Department, Government of Tamil Nadu - constitution of three Special Courts, viz., two Additional Metropolitan Magistrates' Courts at Chennai (in the cadre of Chief Metropolitan Magistrate) and an Additional Court of Chief Judicial Metropolitan Magistrate at Madurai (in the cadre of Sub Judge) - HELD THAT:- A perusal of the G.O. Ms. No. 1293 dated 24.05.1982 no doubt makes it clear that in exercise of powers conferred by the Proviso to Sub Section (1) of Section 11 of the Code of Criminal Procedure, 1973 the Governor of Tamilnadu have examined the recommendation of the Law Commission in consultation with this Court and established a Special Court of Judicial Magistrate of the First Class at Madurai for the local area comprising the districts of Madurai, Ramanathapuram, Thirunelveli and Kanyakumari for trial of economic offences and Two Additional Chief Metropolitan Magistrate's Courts at Chennai. Though the Law Commission in its 47th Report recommended the establishment of Special Courts for the effective and speedy prosecution of economic offences, the Government of Tamil Nadu have examined the suggestion of the Government of India in consultation with this Court and constituted an Additional Court of Chief Judicial Magistrate at Madurai (in the cadre of Sub-Judge) and two Metropolitan Magistrates' Courts in the City of Madras (in the cadre of Chief Metropolitan Magistrate) for the speedy trial of economic offences with specified jurisdiction - When things stand so, Special Court can attract cases, which are arising out within the jurisdiction specified and in the rest of the area, Judicial Magistrate of concerned jurisdiction alone has got jurisdiction, as rightly contended by Mr. B.Vijay, Learned Counsel appearing for the First Respondent. The Petitioner cannot misuse this forum in order to transfer of the case pending before the Judicial Magistrate-I, Thanjavur to Chennai and the Writ Petition is liable to be rejected - The petition is dismissed.
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2021 (8) TMI 423
Maintainability of appeal - appeal dismissed solely for the reason that the statutory requirement of making the pre-deposit, as contemplated under section 129(E) of the Customs Act, 1962, was not complied with - HELD THAT:- There is no consideration of the statement made by the Appellant in the memo of appeal nor any opportunity was granted to the Appellant to make the predeposit. The Commissioner (Appeals) should have passed an appropriate order regarding the pre-deposit and if the Commissioner (Appeals) was not satisfied, an order should have been passed and if the Commissioner (Appeal) was not satisfied, time should have also been given to the Appellant to make the pre-deposit. The order dated May 29 May, 2016 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside. The Commissioner (Appeals) shall examine the issue relating to pre-deposit afresh and pass an appropriate order. If the Commissioner (Appeals) is not satisfied with the submissions of the Appellant regarding pre-deposit, some reasonable time should be granted to the Appellant to make the pre-deposit. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (8) TMI 413
Sanction of the Scheme of Amalgamation - directions sought for dispensing with meetings of the shareholders of the Transferee and Transferor companies - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Directions regarding holding and convening of various meetings issued - directions regarding issuance of various notices also issed. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 447
Maintainability of application - initiation of CIRP - existence of dispute or not - service of demand notice - Corporate Debtor failed to make repayment of its dispute - Operational Creditors or not - amount receivable by Overseas from Kay Bouvet in respect of the provisions of goods or services, including employment or a debt in respect of the payment of dues and as such or not - tripartite agreement - HELD THAT:- Once the Operational Creditor has filed an application which is otherwise complete, the adjudicating authority has to reject the application under Section 9(5)(ii)(d) of IBC, if a notice has been received by Operational Creditor or if there is a record of dispute in the information utility. What is required is that the notice by the Corporate Debtor must bring to the notice of Operational Creditor the existence of a dispute or the fact that a suit or arbitration proceedings relating to a dispute is pending between the parties. All that the adjudicating authority is required to see at this stage is, whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is a mere bluster. It is abundantly clear that the case of Kay Bouvet that the amount of ₹ 47,12,10,000/which was paid to it by Overseas, was paid on behalf of Mashkour from the funds released to Overseas by Exim Bank on behalf of Mashkour, cannot be said to be a dispute which is spurious, illusory or not supported by the evidence placed on record. The material placed on record amply clarifies that the initial payment which was made to Kay Bouvet as a subContractor by Overseas who was a Contractor, was made on behalf of Mashkour and from the funds received by Overseas from Mashkour - On the contrary, the documents clarify that the termination of the contract with Overseas would not absolve Overseas of any liability for the balance of the LoC 1st tranche of 25 Million disbursed to them other than USD 10.62 paid to Kay Bouvet. NCLT had rightly rejected the application of Overseas after finding that there existed a dispute between Kay Bouvet and Overseas and as such, an order under Section 9 of the IBC would not have been passed. We find that NCLAT has patently misinterpreted the factual as well as legal position and erred in reversing the order of NCLT and directing admission of Section 9 petition. The impugned order dated 21st December 2018, passed by NCLAT is quashed and set aside - Appeal is allowed.
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2021 (8) TMI 431
Auction of goods, detained by Customs Authority during moratorium period - allegation is that ignoring the intimation by IRP, the Dept. illegally auctioned the goods contained in the 256 containers - Whether the Adjudicating Authority was justified in directing the amount to be made over to the Corporate Debtor, in the light of Claims made by MSC Shipping and the Customs Dept.? - Applicability of Section 48 of the Customs Act, 1962. HELD THAT:- MSC Shipping filed Form B on 04.06.2019 as an Operational Creditor prior to the filing of this Appeal. Additionally, its Agency MSC Agency (India) Pvt. Ltd. also filed Form B on 04.06.2019 as an Operational Creditor before the Resolution Professional. It is significant to mention that both MSC Shipping and its Agency have clearly specified in item 7 details of how when Debt occurred that the claimants provide marine containers and are engaged in the business of carriage of goods by sea. Briefly put, it is stated therein that in all the 15 Bills of Lading, the Corporate Debtor and its sister concern Bhuvee Profiles were declared as Consignee and/or Notified Party . As the consignee/and endorsee and/or holder of the goods being the receiver of the goods are bound by the terms conditions of the said Bills of Lading. Therefore, admittedly being the consignee of the goods, the Corporate Debtor has a right vested in him over the goods. The goods were undisputably purchased by the Corporate Debtor . Applicability of Section 48 of the Customs Act, 1962 - HELD THAT:- In case of non-clearance of the goods within 30 days or within extended period or if the title of any imported goods is relinquished after notice to the importer and with the permission of the proper officer, the goods can be sold by the Custom Authority. Section 48 of the Customs Act, 1962 relates to sale of goods in the custody of the Customs in the manner prescribed therein. - In the present case, having failed to auction the goods prior to the CIRP period, the Customs Dept. cannot now, subsequent to the imposition of Moratorium, proceed to auction the goods. Having done so, the sale proceeds of the so conducted auction cannot be made over to the Customs Dept. . It is relevant to mention that a Review Application has been filed before the Adjudicating Authority on 30.08.2019 which was dismissed vide Order dated 19.11.2019 and the Customs Authority was directed to make payment to the Corporate Debtor . Company Appeal is dismissed. Company Appeal preferred by the Customs Dept. is partly allowed the penalty imposed by the Adjudicating Authority of ₹ 1 Lakh per day is set aside and the direction of the Adjudicating Authority that the Customs Dept. shall have the right to submit their Claim with the Liquidator and would be treated as Operational Creditor , is confirmed.
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2021 (8) TMI 427
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - adjustment of amount remitted by Corporate debtor or not - pre-existing dispute present or not - use the provisions of IBC as a recovery forum or not. Whether the Operational Creditor has not adjusted the amount of ₹ 2,60,594 remitted by the Corporate Debtor? - HELD THAT:- The credit entries are matching with the bank account statement filed by the Corporate Debtor which is at Pg. 155 to 156 - Thus, there are no no ground to hold that ₹ 2,60,594 remitted by the Corporate Debtor has not been adjusted by the Operational Creditor. Ld. Adjudicating Authority has erroneously given a finding that the Operational Creditor has suppressed these two payments. Whether there is a pre-existing dispute? - HELD THAT:- It is apparent that in reply to the notice Corporate Debtor has not raised any dispute. On the other hand, the Corporate Debtor assured the Operational Creditor that after verification of the invoices/bills, if there is any payment pending from their end, they will release the payment. Thereafter, Operational Creditor has sent an email dated 30.07.2019 and 25.09.2019 with a request that after lapse of considerable time no payment has been made to them in regard to the invoices/bills. Even the Corporate Debtor has not disputed the claim. Therefore, the Operational Creditor has filed the Application under Section 9 of the IBC on 04.11.2019. It is to be noted that after sending such reply, the Corporate Debtor has never clarified that which bills are not genuine - The Operational Creditor has filed the true copy of purchase orders along with the tax invoices (A4 at. Pg. 53-124) in reply affidavit filed by the Corporate Debtor before this Tribunal it is not challenged that these documents are not genuine. The Corporate Debtor has failed to prove that there exists any dispute between the parties in regard to the amount claimed by the Operational Creditor. Ld. Adjudicating Authority superficially examined the allegations and held that there is dispute between the parties. Such finding cannot be sustained. Whether the Operational Creditor has attempted to use the provisions of IBC as a recovery forum? - HELD THAT:- Once the Operational Creditor has filed an Application, which is otherwise complete the Adjudicating Authority must reject the Application under Section 9 (5) (2) (d) of the IBC, if notice of dispute has been received by the Operational Creditor or there is record of dispute in the information utility. The Corporate Debtor has failed to prove that there exists any dispute between the parties in regard to the amount claimed by the Operational Creditor. The Corporate Debtor has not placed on record any material to infer that the Operational Creditor has filed the claim prematurely or for extraneous considerations or as a substitute for debt enforcement procedures - The Operational Creditor has claimed ₹ 12,75,316/- which is supported by the ledger entries, purchase orders, invoices, exchange of emails and demand notice. The Corporate Debtor has not filed any document in rebuttal. The Ld. Adjudicating Authority is not convincing in stating that the Operational Creditor has attempted to use this forum as a recovery forum, and that also in respect of a disputed debt . Ld. Adjudicating Authority also held that no case has been made out that the Corporate Debtor has become insolvent and has lost its substratum such that it is unable to pay its debts or run its business - Reliance placed in Judgment of this Appellate Tribunal in the case of MONOTRONE LEASING PRIVATE LIMITED VERSUS PM COLD STORAGE PRIVATE LIMITED [ 2020 (8) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where coordinate Bench of this Tribunal held that: We are bound to emphasize that a presumption cannot be drawn merely on the basis that a company, being solvent, cannot commit any default. As observed in financial and economic parlance, the inability to pay-off debts and committing default are two different aspects which required to be adjudged on equally different parameters. Inability to pay debt has no relevance for admitting or rejecting an Application for initiation of CIRP under the IBC - Thus, the finding of the Adjudicating Authority cannot be agreed upon. The Ld. Adjudicating Authority has wrongly rejected the claim on unfounded grounds. From the record, it is found that the Corporate Debtor has defaulted to pay more than one lakh and in absence of pre-existing dispute and the record being complete, thus, the Application under Section 9 of the IBC preferred by the Operational Creditor was fit to be admitted. The case remitted to the Adjudicating Authority for admitting the Application under Section 9 of the IBC, after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter prior to the admission - appeal allowed.
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2021 (8) TMI 416
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and default or not - validity and service of statutory demand notice - HELD THAT:- Though, the demand notice sent to the registered office address was not delivered but the notices sent to Corporate Office address and Okhla address have been duly delivered and served on the respondent-corporate debtor. The respondent-corporate debtor while not denying the service of the demand notice at its Corporate Office address and Okhla office address submits that since the demand notice was not served at its registered office address, the same cannot be treated as valid service - It is settled position of law that service of demand notice at the Corporate Office address or any other address where the corporate debtor regularly is having its operations shall be deemed to be a valid and due delivery of notice - decided in favor of petitioner. Existence of debt and default or not - whether the petitioner proved the debt and the liability of the respondent-corporate debtor to pay the same? - HELD THAT:- The petitioner, inspite of the specific averments made by the respondent-corporate debtor in its reply, has not chosen to dispute the same by filing any rejoinder to the said reply. The petitioner has also not denied the contention of the corporate debtor that the invoices raised in respect of Season 3 were not in accordance with the work done and the amount for the service was over charged and accordingly, an amount of ₹ 1 crore has been paid in full and final settlement of all the claims in respect of Season 3 - In the absence of specific denial of the averments made by the corporate debtor and since the petitioner failed to prove the debt and the liability to pay the same by the corporate debtor, this issue is held against the petitioner. Petition dismissed.
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2021 (8) TMI 414
Rejection of Resolution Plan - benefit of any orders passed in the avoidance application filed or to be filed by the Respondent No.1- Administrator under Sections 43 to 51 or under Section 66 of the Insolvency and Bankruptcy Code, 2016 - recoveries/ contributions in the avoidance application - HELD THAT:- In matter of M/S. VENUS RECRUITERS PRIVATE LIMITED VERSUS UNION OF INDIA AND ORS. [ 2020 (11) TMI 850 - DELHI HIGH COURT] , Committee of Creditors had no occasion to deal with transaction which was later filed as Application under Sections 25(2) (j), 43 to 51 and 66 of the I B Code - in the present matter, the learned Counsel for the Respondents are submitting that here there were detailed deliberations on how to deal with the avoidance application under Section 66 of the I B Code and once it has been thoroughly discussed and decisions taken by the Committee of Creditors by majority, the same are not open for deliberations specially in the context where the Appellant has voted in favour of the Resolution Plan in the group to which the Appellant belonged. It appears that the Company Appeal in MOONS TECHNOLOGIES LIMITED VERSUS THE ADMINISTRATOR DEWAN HOUSING FINANCE CORPORATION LTD. AND ORS. [ 2021 (7) TMI 435 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH] is heavily based on the observations in the matter of M/s. Venus Recruiters Pvt. Ltd. . At this preliminary stage, it will not appropriate for us to make detail observations as it may be treated as a finding in the Appeals The rival claims, which are more questions of law would require deliberation and decision at appropriate stage. If the averments made by Appellant are juxtaposed with averments made by Respondents, we do not find it a fit case to pass interim orders as sought. We do not think that any interim order as sought with regard to Resolution Plan approved needs to be passed. Application disposed off.
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2021 (8) TMI 412
Liquidation proceedings - Jurisdiction - seeking direction to deposit the arrears in salaries of the workmen and employees - matter regarding the applicability of the provision of the I B Code to government companies is pending before the Hon'ble Bombay High Court and the Hon'ble Guwahati High Court - HELD THAT:- The applicant could not produce any law to show that this Adjudicating Authority is empowered to review its own order and quash the liquidation proceedings. That is the reason in the course of hearing, Ld. Counsel for the applicant submitted that since the violation of the Code to declare the moratorium against the Government Company is under challenge before the Hon'ble Guwahati High Court in HINDUSTAN PAPER CORPORATION LTD., HEMANTA KUMAR KAKATI, KRISHNA KANTA SUTRADHAR VERSUS THE UNION OF INDIA, HINDUSTAN PAPER CORPORATION LTD., INCOME TAX DEPTT. REP. BY THE CHIEF COMMISSIONER OF INCOME TAX, KULDEEP VERMA AND ORS. [ 2020 (6) TMI 760 - GAUHATI HIGH COURT] , the petitioner is not pressing this prayer. Hence, we are not inclined to consider this prayer. Seeking to stay the liquidation proceedings - HELD THAT:- It is an admitted fact that the liquidation order was passed by this Adjudicating Authority on 14.05.2019 and liquidator was appointed. Thereafter, in the year 2020, the applicant has filed a writ application HINDUSTAN PAPER CORPORATION LTD., HEMANTA KUMAR KAKATI, KRISHNA KANTA SUTRADHAR VERSUS THE UNION OF INDIA, HINDUSTAN PAPER CORPORATION LTD., INCOME TAX DEPTT. REP. BY THE CHIEF COMMISSIONER OF INCOME TAX, KULDEEP VERMA AND ORS. [ 2020 (6) TMI 760 - GAUHATI HIGH COURT] before the Hon'ble Guwahati High Court and raised all these issues. But the applicant however, failed to produce any document to show that the applicant had prayed for stay of the liquidation proceedings in that writ petition. Under the IBC 2016, there is no provision to stay the liquidation proceedings once the order of liquidation is passed by the Adjudicating Authority. If the applicant is aggrieved by the order of liquidation passed by this Adjudicating Authority, he has a remedy to file an appeal before the Hon'ble NCLAT. Since the liquidation proceedings have already started, the matter regarding the power of the Adjudicating Authority to pass a liquidation order against -a Government Company is sub judice before the Hon'ble High Courts of Guwahati as well as Delhi and the order of Liquidation has already been confirmed by the Hon'ble NCLAT - Application dismissed.
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Service Tax
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2021 (8) TMI 446
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refusal to issue the Discharge Certificate in electronic form - whether redemption fine falls within the meaning of the word 'penalty' used in section 129 of the Scheme? - HELD THAT:- Neither word has been defined under the Scheme or the Rules framed thereunder or the principal Act, namely the Central Excise Act, 1944. Indisputably, the redemption fine imposed on the petitioner was payable in lieu of confiscation . As to confiscation , historically, under the Roman Law, it was an act or desire of taking into hands of the Emperor and, to transfer it to the imperial treasury, the goods or the commodity forfeited. That principle appears to be existing in favour of the State, under the Central Excise Act, 1944 read with the Customs Act, 1962. Here, it may be noted that the powers of confiscation , though existing under the Customs Act, 1962, have been made applicable to the Central Excise Act, 1944 by virtue of notifications issued under section 12 of the Central Excise Act. Section 9 of that Act provides for penalties punishable with imprisonment, for specified offences. Plainly, same, or similar concept of confiscation exists both under the Customs Act, 1962 and the Central Excise Act, 1944. It allows the revenue authorities to seize and confiscate any goods found offending those legislations. Under both enactments, such confiscation is in addition to the other penalties prescribed against the person offending the laws in the transaction that may give rise to an act of confiscation - under both legislations, there is a right given to the offender to reclaim the title in the confiscated goods, subject to payment of an amount in addition to the other penalties that may have been imposed. That amount is known as the redemption fine , under both laws. The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 provides for (legacy dispute) resolution upon payment of thirty to sixty percent of the disputed demand of tax dues. By virtue of section 123 of the Scheme, tax dues are the total disputed amount of duty only - the legislation seeks to reduce indirect tax legacy litigation, against positive payment of a part (according to the predetermined rates) of the disputed dues of tax. Remarkably, the Scheme requires the applicant/assessee to pay part of the disputed dues of tax even to obtain closure to any appeal filed by the revenue. Also, the legislation is not an amnesty scheme - to encourage voluntary disclosures of hitherto undisclosed, evaded taxes. Rather, by virtue of section 124 (1) (e) of the Scheme, it purposely denies any relief to persons who may have made a voluntary disclosure. Clearly, the Scheme is a reform legislation. It seeks to end old or pending indirect tax disputes, against payment of a substantial part of the disputed tax amount. The Scheme being a piece of reformative legislation, redemption fine that is a penalty in rem must clearly be shown to have been excluded from the meaning of the word penalty used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the redemption fine /penalty in rem. In absence of any provision to exclude redemption fine / penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, redemption fine would always remain a penalty covered under the meaning of that word used in section 129 (1) (a) read with section 121 (u) of the Scheme. Thus, upon the petitioner being eligible under section 125 of the Scheme and upon payment of the entire amount due under section 124 of the Scheme and, in absence of any other objection being raised by the revenue, clearly, the petitioner is entitled to issue of the Discharge Certificate - the communication dated 20.12.2019 issued by the CBIC providing for payment of redemption fine in addition to the settlement amount paid under section 124 of the Scheme and further providing that the Discharge Certificate under the Scheme may not be issued unless that fine has been paid, is clearly contrary to the Scheme - petition allowed.
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Central Excise
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2021 (8) TMI 436
Maintainability of petition without exhausting the right of appeal - Refund/Rebate claim - issue was taken up in the case of M/S RAGHAV INDUSTRIES LTD. VERSUS UNION OF INDIA AND OTHERS [ 2016 (3) TMI 550 - MADRAS HIGH COURT] , the said judgment of the learned Single Bench was taken by way of an appeal before the Hon'ble Division Bench and the writ appeal is pending - HELD THAT:- This Court is of the considered opinion that the pendency of an appeal before the Hon'ble Division of the High Court of Madras is not a bar for the appellant to prefer an appeal under the statute by following the procedures contemplated. If at all the benefit is conferred by the Hon'ble Division Bench or the matter is further taken before the Hon'ble Supreme Court, all such things cannot be a ground to keep the writ petition pending for an indefinite period. As of now, the claim set out by the petitioner was rejected by the High Court of Madras in M/S RAGHAV INDUSTRIES LTD. VERSUS UNION OF INDIA AND OTHERS [ 2016 (3) TMI 550 - MADRAS HIGH COURT ] despite the fact that the first respondent is in favour of the petitioner. All these aspects are to be considered as and when the points are considered either by the Department or by the Courts in an appropriate proceedings. Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy - The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The petitioner is at liberty to prefer an appeal under the provisions of the Act in the prescribed format and by complying with the provisions of the Act and Rules. In the event of filing of an appeal, the Appellate Authority is bound to consider the same, pass orders on merits and in accordance with law and by affording an opportunity to the writ petitioner as expeditiously as possible - Petition disposed off.
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2021 (8) TMI 415
Condonation of delay of 282 days in filing appeal - delay was caused due to prevailing confusion during the time - only prayer in the appeal was for rectification due to mistake of law committed by Dy. Commissioner in the order-in-original - HELD THAT:- It is found that a simple rectification petition before the Adjudicating Authority could have been sufficient pointing out to the Transitional Provisions for granting of cash refund. However, CGST regime was brought into force w.e.f. 1.7.2017 and there was lots of confusion and lack of knowledge, both on the part of the Departmental Officers as well as the assesses. This appeal is entertained for doing justice to the appellant - also, the delay before the Commissioner (Appeals) was of 282 days and there are no deliberate latches on the part of the appellant. The delay is apparently caused due to confusion prevailing, being the initial period of CGST regime. The order-in-original is modified directing the Adjudicating Authority to grant cash refund of ₹ 4,87,015/- with interest from the date of sanction till the date of disbursement, as per Rules - cost is imposed on the appellant of ₹ 10,000/- to be paid to the UNICEF and compliance report to be filed before the Registry within 2 months, by 30.09.2021 - Appeal allowed.
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CST, VAT & Sales Tax
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2021 (8) TMI 444
Priority of Charge - First Right of secured creditor and Sales Tax Department - Seeking direction to register sale certificate on receipt of stamp duty and registration charges - evasion of tax - attachment of property - encumbrance in the property - HELD THAT:- The respondent no. 5 has purportedly refused to register the sale certificate relying on Clause (i) of Sub-Rule (1) of Rule 44 of the Rules of 1961, though it is not specifically stated in the affidavit-in-reply filed by the respondent no. 5 or during the submissions made on behalf of the respondents. It needs to be noted that Sub-Section (1) of Section 22-A clearly provided that only if a notification is published in the Official Gazette declaring that registration of any document or class of document is opposed to any public policy, only then the question of refusal of registration of the document will arise. Even otherwise, since Section 22-A is no longer on the statute book, registration of the sale certificate could not have been refused on the ground of same being in contravention of Section 22-A of the Act of 1908. The ground of encumbrance to refuse registration of a document is in relation to marketable title of the property. There is encumbrance of the Department of Sales Tax. The Registering Officer shall have to ascertain whether the requisite permission from the Competent Authority under the relevant enactment has been obtained and is required to annex the said permission, if it is prohibited. The Registering Officer will also have to ascertain whether the document presented for registration is contrary to any of the terms and conditions mentioned in the NOC granted by the Competent Authority. Undisputedly, in the present matter, the respondents have not shown any such statutory prohibition which enables the Registering Officer to refuse registration of the sale certificate. Thus, it is the duty of the respondent no. 5 to register the sale certificate issued in favour of the auction purchaser by the Authorized Officer under the provisions of the Rules of 2002. The respondent no. 7 is duty bound to take action against the defaulter for evading taxes and recovering its dues by attaching their movable properties - respondent no. 5 is directed to register the sale certificate dated 06/07/2020 subject to compliance of Ground Nos. 2 and 3 and on payment of stamp duty as per the ready reckoner and after following all the other requirements of law as per the Registration Act, 1908 - the registration of the sale certificate shall not be refused on the basis of encumbrance of the respondent no. 7. Application disposed off.
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2021 (8) TMI 433
Availability of sales tax exemption - taxable turnover of the Petitioner - order of the ACST confirmed on the ground that the Petitioner did not produce sufficient documentary evidence to substantiate its contentions - HELD THAT:- The impugned orders of the ACST and the Appellate authority are unsustainable in law. In Vadilal Chemicals Ltd. [ 2005 (8) TMI 121 - SUPREME COURT ], the Supreme Court disapproved of the sales tax authority in that case ignoring the certificate issued by the DIC. The Supreme Court took the view that it was not open to the sales tax authorities to cancel the eligibility certificate issued by the DIC and deprive the assessee of sales tax exemption. Indeed it is trite that it is the DIC which is the appropriate authority to determine whether a certain SSI unit needs to be granted eligibility from payment of sales tax in terms of the IPR 1989. The certificate so issued by the DIC cannot be brushed aside by the Sales Tax Department - In the present case, despite a clarification issue by the DIC that the Petitioner was eligible for the grant of exemption from payment of sales tax, notwithstanding the differing quantities of raw material consumption and finished product manufactured, there was no justification for the Sales tax Department to invoke Rule 80 of the OST Rules and issue the impugned SCN and the consequential fresh assessment order, which in turn was confirmed by the appellate authority. Petition disposed off.
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Indian Laws
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2021 (8) TMI 448
Recognition and enforcement of foreign awards - Part II of the Arbitration and Conciliation Act, 1996 - Jurisdiction of District Judge to judge Foreign Award - enforcement of arbitration clause against persons who are non-signatories - HELD THAT:- All the requirements of sub-section (1) are procedural in nature, the object being that the enforcing court must first be satisfied that it is indeed a foreign award, as defined, and that it is enforceable against persons who are bound by the award. Shri Vishwanathan and Shri Salve s arguments that to prove that a nonsignatory to an arbitral agreement can only be roped in to the aforesaid agreement on evidence being adduced before the enforcing court as to whether the non-signatory is a person who claims under a party or is otherwise affected by the alter ego doctrine, is disingenuous to say the least. Section 47(1)(c) being procedural in nature does not go to the extent of requiring substantive evidence to prove that a non-signatory to an arbitration agreement can be bound by a foreign award. As a matter of fact, Section 47(1)(c) speaks of only evidence as may be necessary to prove that the award is a foreign award. Section 47(1)(c) would apply to adduce evidence as to whether the arbitration agreement is a New York Convention agreement. Also, the requisite Central Government notification can be produced under Section 47(1)(c), so that Section 44(b) gets satisfied. To argue that the burden of proof is on the person enforcing the award and that this burden can only be discharged by such person leading evidence to affirmatively show that a non-signatory to an arbitration agreement can be bound by a foreign award is outside Section 47(1)(c). This argument consequently stands dismissed. The appellants then pressed Section 48(1)(c) into operation. As can be seen, Section 48(1)(c) relates to an award which deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submissions to arbitration - the proviso to Section 48(1)(c) states that an award may be partially enforced, provided that matters which are outside the submission to arbitration can be segregated, thereby again showing that the thrust of the provision is whether the dispute between parties are qua excepted matters for example, or are otherwise outside the scope of the arbitration agreement. As a matter of fact, if an international commercial arbitration were to be held in India, Section 28(1)(b) recognises that an arbitral tribunal can decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute which, in turn, has a direct nexus to the substantive law of the country whose laws are said to apply. There is no ground in the pari materia provisions of Section 34 to set aside such award on the ground that the substantive law of that country has been infracted. Indeed, the only ground on which such award could possibly be interfered with is if such award, valid under the law which it applied, could be held to be contrary to the public policy of India. There can be no doubt whatsoever that as a result of the machinations of Upadhyaya and Pathak, as found by the arbitral tribunal, ISS was deprived of commission legitimately due to it under the representation agreement. This being so, there can be no doubt that, on facts as proved before the arbitral tribunal, actual loss can be said to have been occasioned to ISS - In any case, the damages so awarded in the facts of this case cannot even remotely be said to shock the conscience of this Court so as to clutch at the basic notion of justice ground contained in Section 48(2) Explanation (1)(iii). Appeal dismissed.
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2021 (8) TMI 439
Dishonor of Cheque - acquittal of the accused - legally enforceable debt or not - allegation of clerk misusing the cheque - rebuttal of resumption - Section 139 of N.I.Act - HELD THAT:- When the respondent/accused has admitted his signature on the cheque and when the cheque belongs to him, admittedly the appellant/complainant is a holder of the cheque in due course under Section 118 of N.I.Act. Hence, the presumption under Section 139 of N.I.Act is in favour of the appellant/complainant and it is for the respondent/accused to rebut the said presumption, which is mandatory and statutory presumption. The respondent/accused did not lead any defence evidence for rebutting the presumption and he can rebut the presumption by available material, but mere denial does not amount to rebuttal of the presumption. The trial court while considering the transaction has dealt it as if a civil case and casted burden on the appellant/complainant to prove the transaction ignoring the presumption under Section 139 of N.I.Act - The trial court committed an error apparent on the face of the records by casting burden on the appellant/complainant against the mandatory requirement under Section 139 of N.I.Act. The learned Magistrate has erred in holding that there is no legally enforceable debt and committed an error in acquitting the respondent/accused. The judgment of acquittal passed by the learned Magistrate is erroneous, illegal and capricious and as such, it calls for interference by this court in this appeal. The impugned order of acquittal passed by the Principal Senior Civil Judge CJM, Gadag is set aside - Appeal allowed.
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2021 (8) TMI 438
Dishonor of Cheque - insufficiency of funds - validity of legal notice issued by the appellant to the respondent-Company - Section 138(b) of the N.I. Act? - HELD THAT:- A perusal of provisions particularly, clause (b) makes it clear that, the payee or the holder in due course of the cheque, as the case may be, makes a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, he is entitled to invoke Section 138 N.I. Act. It is pertinent to mention here that the phrase contained in clause (b) of Section 138 N.I. Act, i.e. demand for the payment of the said amount would only mean and refer to dishonoured cheque amount - In the present case, in the legal notice issued by the appellant, dated 15.03.2013, the total cheque amount referred in Serial Nos. 3, 5 and 6, would be around a sum of ₹ 16,40,340/-, but, nowhere, in the notice, does the appellant raise a demand for payment of ₹ 16,40,340/- towards the dishonoured cheques referred in Serial Nos. 3, 5 and 6. A perusal of the judgment in K.R. Indira's case [ 2003 (10) TMI 385 - SUPREME COURT ] it is clear that, if the demand for an amount covered by dishonoured cheque is conspicuously absent in the notice issued, then, the notice in question is imperfect. In the present case also, the exact amount, which the appellant claimed for towards the dishonoured cheques was not mentioned in the legal notice, and the appellant has mentioned only the serial numbers, viz., Serial Nos. 3, 5, and 6 in respect of the dishonoured cheques. Therefore, this Court is of the view that the legal notice issued by the appellant does not satisfy the ingredients contemplated under Section 138(b) of the N.I. Act. and the Court below having considered all these aspects in a proper perspective, rightly refused to entertain the complaint by holding that the legal notice issued by the appellant is not in accordance with the provision of Section 138(b) of the N.I. Act and accordingly, dismissed the complaint. Appeal dismissed.
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